Correlation Between CARRIER and Douglas Emmett

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

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

Diversification Opportunities for CARRIER and Douglas Emmett

0.06

Correlation Coefficient

CARRIER  Douglas Emmett

Significant diversification

The 3 months correlation between CARRIER and Douglas is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CARRIER GLOBAL P and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and CARRIER 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 CARRIER GLOBAL P 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 CARRIER i.e., CARRIER and Douglas Emmett go up and down completely randomly.

Pair Corralation between CARRIER and Douglas Emmett

Assuming the 90 days trading horizon CARRIER GLOBAL P is expected to generate 0.51 times more return on investment than Douglas Emmett. However, CARRIER GLOBAL P is 1.96 times less risky than Douglas Emmett. It trades about -0.08 of its potential returns per unit of risk. Douglas Emmett is currently generating about -0.14 per unit of risk. If you would invest  9,943  in CARRIER GLOBAL P on October 9, 2024 and sell it today you would lose (223.00) from holding CARRIER GLOBAL P or give up 2.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

CARRIER GLOBAL P  vs.  Douglas Emmett

CARRIER GLOBAL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARRIER GLOBAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARRIER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Douglas Emmett

Risk-Adjusted Performance

4 of 100

Modest

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.

Pair Trading with CARRIER and Douglas Emmett

The main advantage of trading using opposite CARRIER and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARRIER 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 CARRIER GLOBAL P 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.