Correlation Between Global Medical and Douglas Emmett
Can any of the company-specific risk be diversified away by investing in both Global Medical and Douglas Emmett at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global Medical and Douglas Emmett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Medical REIT and Douglas Emmett, you can compare the effects of market volatilities on Global Medical and Douglas Emmett and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global Medical with a short position of Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and Douglas Emmett.
Diversification Opportunities for Global Medical and Douglas Emmett
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Douglas is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and Global Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global Medical REIT are associated (or correlated) with Douglas Emmett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Emmett has no effect on the direction of Global Medical i.e., Global Medical and Douglas Emmett go up and down completely randomly.
Pair Corralation between Global Medical and Douglas Emmett
Given the investment horizon of 90 days Global Medical is expected to generate 3.59 times less return on investment than Douglas Emmett. But when comparing it to its historical volatility, Global Medical REIT is 1.24 times less risky than Douglas Emmett. It trades about 0.05 of its potential returns per unit of risk. Douglas Emmett is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,355 in Douglas Emmett on September 3, 2024 and sell it today you would earn a total of 581.00 from holding Douglas Emmett or generate 42.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Medical REIT vs. Douglas Emmett
Performance |
| Timeline |
| Global Medical REIT |
| Douglas Emmett |
Global Medical and Douglas Emmett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Medical and Douglas Emmett
The main advantage of trading using opposite Global Medical and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Medical position performs unexpectedly, Douglas Emmett can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Douglas Emmett will offset losses from the drop in Douglas Emmett's long position.| Global Medical vs. Healthpeak Properties | Global Medical vs. Ventas Inc | Global Medical vs. National Health Investors | Global Medical vs. Sabra Healthcare REIT |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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