Correlation Between Douglas Elliman and Digitalbridge

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

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

Diversification Opportunities for Douglas Elliman and Digitalbridge

0.56

Correlation Coefficient

Douglas Elliman  Digitalbridge

Very weak diversification

The 3 months correlation between Douglas and Digitalbridge is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Elliman and Digitalbridge Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digitalbridge Group and Douglas Elliman 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 Elliman are associated (or correlated) with Digitalbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digitalbridge Group has no effect on the direction of Douglas Elliman i.e., Douglas Elliman and Digitalbridge go up and down completely randomly.

Pair Corralation between Douglas Elliman and Digitalbridge

Given the investment horizon of 90 days Douglas Elliman is expected to under-perform the Digitalbridge. In addition to that, Douglas Elliman is 1.44 times more volatile than Digitalbridge Group. It trades about -0.11 of its total potential returns per unit of risk. Digitalbridge Group is currently generating about -0.04 per unit of volatility. If you would invest  1,309  in Digitalbridge Group on November 28, 2024 and sell it today you would lose (119.00) from holding Digitalbridge Group or give up 9.09% of portfolio value over 90 days.

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

Douglas Elliman  vs.  Digitalbridge Group

Douglas Elliman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Douglas Elliman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Digitalbridge Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digitalbridge Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Douglas Elliman and Digitalbridge

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

The idea behind Douglas Elliman and Digitalbridge Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.