Correlation Between Douglas Emmett and Lineage, Common

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

By analyzing existing cross correlation between Douglas Emmett and Lineage, Common Stock, you can compare the effects of market volatilities on Douglas Emmett and Lineage, Common 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 Lineage, Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and Lineage, Common.

Diversification Opportunities for Douglas Emmett and Lineage, Common

-0.77

Correlation Coefficient

Douglas Emmett  Lineage, Common

Pay attention - limited upside

The 3 months correlation between Douglas and Lineage, is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and Lineage, Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lineage, Common Stock 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 Lineage, Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lineage, Common Stock has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and Lineage, Common go up and down completely randomly.

Pair Corralation between Douglas Emmett and Lineage, Common

Considering the 90-day investment horizon Douglas Emmett is expected to generate 0.9 times more return on investment than Lineage, Common. However, Douglas Emmett is 1.11 times less risky than Lineage, Common. It trades about 0.19 of its potential returns per unit of risk. Lineage, Common Stock is currently generating about -0.32 per unit of risk. If you would invest  1,800  in Douglas Emmett on September 4, 2024 and sell it today you would earn a total of  125.00  from holding Douglas Emmett or generate 6.94% return on investment over 90 days.

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

Douglas Emmett  vs.  Lineage, Common Stock

Douglas Emmett

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Emmett are ranked lower than 16 (%) 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.

Lineage, Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lineage, Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Douglas Emmett and Lineage, Common

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

The idea behind Douglas Emmett and Lineage, Common Stock 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.