Correlation Between SL Green and Douglas Emmett
Can any of the company-specific risk be diversified away by investing in both SL Green 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 SL Green and Douglas Emmett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SL Green Realty and Douglas Emmett, you can compare the effects of market volatilities on SL Green 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 SL Green with a short position of Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Douglas Emmett.
Diversification Opportunities for SL Green and Douglas Emmett
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SLG-PI and Douglas is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and SL Green 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 SL Green Realty 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 SL Green i.e., SL Green and Douglas Emmett go up and down completely randomly.
Pair Corralation between SL Green and Douglas Emmett
Assuming the 90 days trading horizon SL Green is expected to generate 1.41 times less return on investment than Douglas Emmett. But when comparing it to its historical volatility, SL Green Realty is 1.64 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 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,391 in Douglas Emmett on August 28, 2024 and sell it today you would earn a total of 564.00 from holding Douglas Emmett or generate 40.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
SL Green Realty vs. Douglas Emmett
Performance |
| Timeline |
| SL Green Realty |
| Douglas Emmett |
SL Green and Douglas Emmett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and Douglas Emmett
The main advantage of trading using opposite SL Green and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green 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.| SL Green vs. Cousins Properties Incorporated | SL Green vs. Franklin Street Properties | SL Green vs. Creative Media Community | SL Green vs. Vornado Realty Trust |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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