Correlation Between Creative Media and Douglas Emmett

Can any of the company-specific risk be diversified away by investing in both Creative Media 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 Creative Media and Douglas Emmett into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Creative Media Community and Douglas Emmett, you can compare the effects of market volatilities on Creative Media 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 Creative Media with a short position of Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creative Media and Douglas Emmett.

Diversification Opportunities for Creative Media and Douglas Emmett

-0.8

Correlation Coefficient

Creative Media  Douglas Emmett

Pay attention - limited upside

The 3 months correlation between Creative and Douglas is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Creative Media Community and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and Creative Media 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 Creative Media Community 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 Creative Media i.e., Creative Media and Douglas Emmett go up and down completely randomly.

Pair Corralation between Creative Media and Douglas Emmett

Given the investment horizon of 90 days Creative Media Community is expected to under-perform the Douglas Emmett. In addition to that, Creative Media is 6.8 times more volatile than Douglas Emmett. It trades about -0.24 of its total potential returns per unit of risk. Douglas Emmett is currently generating about 0.19 per unit of volatility. If you would invest  1,617  in Douglas Emmett on September 12, 2024 and sell it today you would earn a total of  328.00  from holding Douglas Emmett or generate 20.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Creative Media Community  vs.  Douglas Emmett

Creative Media Community

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creative Media Community has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Douglas Emmett

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Emmett are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Douglas Emmett demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creative Media and Douglas Emmett

The main advantage of trading using opposite Creative Media and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creative Media 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.

The idea behind Creative Media Community and Douglas Emmett pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.