Correlation Between Douglas Emmett and PACIFIC

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

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

Diversification Opportunities for Douglas Emmett and PACIFIC

0.04

Correlation Coefficient

Douglas Emmett  PACIFIC

Significant diversification

The 3 months correlation between Douglas and PACIFIC is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and PACIFIC go up and down completely randomly.

Pair Corralation between Douglas Emmett and PACIFIC

Considering the 90-day investment horizon Douglas Emmett is expected to under-perform the PACIFIC. In addition to that, Douglas Emmett is 4.18 times more volatile than PACIFIC GAS AND. It trades about -0.21 of its total potential returns per unit of risk. PACIFIC GAS AND is currently generating about -0.51 per unit of volatility. If you would invest  9,099  in PACIFIC GAS AND on October 9, 2024 and sell it today you would lose (592.00) from holding PACIFIC GAS AND or give up 6.51% of portfolio value over 90 days.

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

Douglas Emmett  vs.  PACIFIC GAS AND

Douglas Emmett

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Emmett are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Douglas Emmett may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PACIFIC GAS AND

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS AND are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, PACIFIC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Douglas Emmett and PACIFIC

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

The idea behind Douglas Emmett and PACIFIC GAS AND 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.