Correlation Between POWR Lithium and Douglas Emmett
Can any of the company-specific risk be diversified away by investing in both POWR Lithium 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 POWR Lithium and Douglas Emmett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POWR Lithium Corp and Douglas Emmett, you can compare the effects of market volatilities on POWR Lithium 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 POWR Lithium with a short position of Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of POWR Lithium and Douglas Emmett.
Diversification Opportunities for POWR Lithium and Douglas Emmett
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between POWR and Douglas is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding POWR Lithium Corp and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and POWR Lithium 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 POWR Lithium Corp 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 POWR Lithium i.e., POWR Lithium and Douglas Emmett go up and down completely randomly.
Pair Corralation between POWR Lithium and Douglas Emmett
Assuming the 90 days horizon POWR Lithium Corp is expected to generate 7.84 times more return on investment than Douglas Emmett. However, POWR Lithium is 7.84 times more volatile than Douglas Emmett. It trades about 0.1 of its potential returns per unit of risk. Douglas Emmett is currently generating about -0.11 per unit of risk. If you would invest 3.84 in POWR Lithium Corp on October 26, 2024 and sell it today you would earn a total of 0.46 from holding POWR Lithium Corp or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
POWR Lithium Corp vs. Douglas Emmett
Performance |
| Timeline |
| POWR Lithium Corp |
| Douglas Emmett |
POWR Lithium and Douglas Emmett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POWR Lithium and Douglas Emmett
The main advantage of trading using opposite POWR Lithium and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POWR Lithium 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.| POWR Lithium vs. Autohome | POWR Lithium vs. Playa Hotels Resorts | POWR Lithium vs. Funko Inc | POWR Lithium vs. Bassett Furniture Industries |
| Douglas Emmett vs. Brandywine Realty Trust | Douglas Emmett vs. Kilroy Realty Corp | Douglas Emmett vs. Piedmont Office Realty | Douglas Emmett vs. City Office |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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