Correlation Between Douglas Emmett and City Office
Can any of the company-specific risk be diversified away by investing in both Douglas Emmett and City Office 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 Emmett and City Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Douglas Emmett and City Office, you can compare the effects of market volatilities on Douglas Emmett and City Office 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 Emmett with a short position of City Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Douglas Emmett and City Office.
Diversification Opportunities for Douglas Emmett and City Office
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Douglas and City is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Emmett and City Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Office and Douglas Emmett 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 Emmett are associated (or correlated) with City Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Office has no effect on the direction of Douglas Emmett i.e., Douglas Emmett and City Office go up and down completely randomly.
Pair Corralation between Douglas Emmett and City Office
Considering the 90-day investment horizon Douglas Emmett is expected to under-perform the City Office. But the stock apears to be less risky and, when comparing its historical volatility, Douglas Emmett is 1.31 times less risky than City Office. The stock trades about -0.02 of its potential returns per unit of risk. The City Office is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 424.00 in City Office on January 20, 2024 and sell it today you would earn a total of 22.00 from holding City Office or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Douglas Emmett vs. City Office
Performance |
| Timeline |
| Douglas Emmett |
| City Office |
Douglas Emmett and City Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Douglas Emmett and City Office
The main advantage of trading using opposite Douglas Emmett and City Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Emmett position performs unexpectedly, City Office 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 City Office will offset losses from the drop in City Office's long position.| Douglas Emmett vs. Brandywine Realty Trust | Douglas Emmett vs. Kilroy Realty Corp | Douglas Emmett vs. Piedmont Office Realty | Douglas Emmett vs. City Office |
| City Office vs. Hudson Pacific Properties | City Office vs. Piedmont Office Realty | City Office vs. Office Properties Income | City Office vs. Kilroy Realty Corp |
Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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