Correlation Between NSANY and Douglas Emmett

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

By analyzing existing cross correlation between NSANY 275 09 MAR 28 and Douglas Emmett, you can compare the effects of market volatilities on NSANY 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 NSANY with a short position of Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of NSANY and Douglas Emmett.

Diversification Opportunities for NSANY and Douglas Emmett

-0.17

Correlation Coefficient

NSANY  Douglas Emmett

Good diversification

The 3 months correlation between NSANY and Douglas is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding NSANY 275 09 MAR 28 and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and NSANY 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 NSANY 275 09 MAR 28 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 NSANY i.e., NSANY and Douglas Emmett go up and down completely randomly.

Pair Corralation between NSANY and Douglas Emmett

Assuming the 90 days trading horizon NSANY 275 09 MAR 28 is expected to under-perform the Douglas Emmett. But the bond apears to be less risky and, when comparing its historical volatility, NSANY 275 09 MAR 28 is 2.66 times less risky than Douglas Emmett. The bond trades about -0.09 of its potential returns per unit of risk. The Douglas Emmett is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,715  in Douglas Emmett on October 10, 2024 and sell it today you would earn a total of  27.00  from holding Douglas Emmett or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.33%
Values	Daily Returns

NSANY 275 09 MAR 28  vs.  Douglas Emmett

NSANY 275 09

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSANY 275 09 MAR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NSANY 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

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Douglas Emmett are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Douglas Emmett is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NSANY and Douglas Emmett

The main advantage of trading using opposite NSANY and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NSANY 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 NSANY 275 09 MAR 28 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.