Correlation Between Douglas Elliman and Lead Real

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

By analyzing existing cross correlation between Douglas Elliman and Lead Real Estate, you can compare the effects of market volatilities on Douglas Elliman and Lead Real 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 Lead Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Elliman and Lead Real.

Diversification Opportunities for Douglas Elliman and Lead Real

0.69

Correlation Coefficient

Douglas Elliman  Lead Real

Poor diversification

The 3 months correlation between Douglas and Lead is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Elliman and Lead Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lead Real Estate 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 Lead Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lead Real Estate has no effect on the direction of Douglas Elliman i.e., Douglas Elliman and Lead Real go up and down completely randomly.

Pair Corralation between Douglas Elliman and Lead Real

Given the investment horizon of 90 days Douglas Elliman is expected to generate 0.24 times more return on investment than Lead Real. However, Douglas Elliman is 4.12 times less risky than Lead Real. It trades about -0.46 of its potential returns per unit of risk. Lead Real Estate is currently generating about -0.22 per unit of risk. If you would invest  270.00  in Douglas Elliman on September 24, 2024 and sell it today you would lose (111.00) from holding Douglas Elliman or give up 41.11% of portfolio value over 90 days.

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

Douglas Elliman  vs.  Lead Real Estate

Douglas Elliman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Douglas Elliman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Douglas Elliman is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Lead Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lead Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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 Elliman and Lead Real

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

The idea behind Douglas Elliman and Lead Real Estate 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.