Correlation Between Transcontinental and Douglas Elliman

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

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

Diversification Opportunities for Transcontinental and Douglas Elliman

0.09

Correlation Coefficient

Transcontinental  Douglas Elliman

Significant diversification

The 3 months correlation between Transcontinental and Douglas is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental Realty Invest and Douglas Elliman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Elliman and Transcontinental 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 Transcontinental Realty Investors are associated (or correlated) with Douglas Elliman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Elliman has no effect on the direction of Transcontinental i.e., Transcontinental and Douglas Elliman go up and down completely randomly.

Pair Corralation between Transcontinental and Douglas Elliman

Considering the 90-day investment horizon Transcontinental Realty Investors is expected to generate 0.61 times more return on investment than Douglas Elliman. However, Transcontinental Realty Investors is 1.65 times less risky than Douglas Elliman. It trades about 0.05 of its potential returns per unit of risk. Douglas Elliman is currently generating about -0.11 per unit of risk. If you would invest  2,820  in Transcontinental Realty Investors on November 29, 2024 and sell it today you would earn a total of  148.00  from holding Transcontinental Realty Investors or generate 5.25% return on investment over 90 days.

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

Transcontinental Realty Invest  vs.  Douglas Elliman

Transcontinental Realty

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental Realty Investors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Transcontinental may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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.

Pair Trading with Transcontinental and Douglas Elliman

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

The idea behind Transcontinental Realty Investors and Douglas Elliman 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 Global Correlations module to find global opportunities by holding instruments from different markets.