Correlation Between Douglas Emmett and Emera Maine

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

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

Diversification Opportunities for Douglas Emmett and Emera Maine

0.44

Correlation Coefficient

Douglas Emmett  Emera Maine

Very weak diversification

The 3 months correlation between Douglas and Emera is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Emera Maine PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Maine PFD and Douglas Emmett 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 Douglas Emmett are associated (or correlated) with Emera Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Maine PFD has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Emera Maine go up and down completely randomly.

Pair Corralation between Douglas Emmett and Emera Maine

Considering the 90-day investment horizon Douglas Emmett is expected to generate 11.11 times more return on investment than Emera Maine. However, Douglas Emmett is 11.11 times more volatile than Emera Maine PFD. It trades about 0.03 of its potential returns per unit of risk. Emera Maine PFD is currently generating about 0.13 per unit of risk. If you would invest  1,378  in Douglas Emmett on October 11, 2024 and sell it today you would earn a total of  312.00  from holding Douglas Emmett or generate 22.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	23.84%
Values	Daily Returns

Douglas Emmett  vs.  Emera Maine PFD

Douglas Emmett

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Douglas Emmett has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Douglas Emmett is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Emera Maine PFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emera Maine PFD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Emera Maine is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Douglas Emmett and Emera Maine

The main advantage of trading using opposite Douglas Emmett and Emera Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, Emera Maine 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 Emera Maine will offset losses from the drop in Emera Maine's long position.

The idea behind Douglas Emmett and Emera Maine PFD 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.