Correlation Between Douglas Emmett and One Liberty

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

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

Diversification Opportunities for Douglas Emmett and One Liberty

0.3

Correlation Coefficient

Douglas Emmett  One Liberty

Weak diversification

The 3 months correlation between Douglas and One is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and One Liberty Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Liberty Properties 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 One Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Liberty Properties has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and One Liberty go up and down completely randomly.

Pair Corralation between Douglas Emmett and One Liberty

Considering the 90-day investment horizon Douglas Emmett is expected to under-perform the One Liberty. In addition to that, Douglas Emmett is 1.66 times more volatile than One Liberty Properties. It trades about -0.07 of its total potential returns per unit of risk. One Liberty Properties is currently generating about 0.0 per unit of volatility. If you would invest  2,679  in One Liberty Properties on December 27, 2024 and sell it today you would lose (23.00) from holding One Liberty Properties or give up 0.86% of portfolio value over 90 days.

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

Douglas Emmett  vs.  One Liberty Properties

Douglas Emmett

Risk-Adjusted Performance

Very Weak

Over the last 90 days Douglas Emmett has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

One Liberty Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Liberty Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, One Liberty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Douglas Emmett and One Liberty

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

The idea behind Douglas Emmett and One Liberty Properties 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.