Correlation Between Simon Property and Douglas Emmett

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

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

Diversification Opportunities for Simon Property and Douglas Emmett

-0.06

Correlation Coefficient

Simon Property  Douglas Emmett

Good diversification

The 3 months correlation between Simon and Douglas is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and Simon Property 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 Simon Property Group are associated (or correlated) with Douglas Emmett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Emmett has no effect on the direction of Simon Property i.e., Simon Property and Douglas Emmett go up and down completely randomly.

Pair Corralation between Simon Property and Douglas Emmett

Considering the 90-day investment horizon Simon Property Group is expected to generate 0.56 times more return on investment than Douglas Emmett. However, Simon Property Group is 1.79 times less risky than Douglas Emmett. It trades about 0.02 of its potential returns per unit of risk. Douglas Emmett is currently generating about -0.11 per unit of risk. If you would invest  18,150  in Simon Property Group on November 28, 2024 and sell it today you would earn a total of  230.00  from holding Simon Property Group or generate 1.27% return on investment over 90 days.

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

Simon Property Group  vs.  Douglas Emmett

Simon Property Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Simon Property is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Simon Property and Douglas Emmett

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

The idea behind Simon Property Group and Douglas Emmett 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.