Correlation Between Saratoga Investment and Douglas Emmett
Can any of the company-specific risk be diversified away by investing in both Saratoga Investment 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 Saratoga Investment and Douglas Emmett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saratoga Investment Corp and Douglas Emmett, you can compare the effects of market volatilities on Saratoga Investment 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 Saratoga Investment with a short position of Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saratoga Investment and Douglas Emmett.
Diversification Opportunities for Saratoga Investment and Douglas Emmett
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Saratoga and Douglas is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Investment Corp and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett and Saratoga Investment 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 Saratoga Investment Corp 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 Saratoga Investment i.e., Saratoga Investment and Douglas Emmett go up and down completely randomly.
Pair Corralation between Saratoga Investment and Douglas Emmett
Considering the 90-day investment horizon Saratoga Investment is expected to generate 1.42 times less return on investment than Douglas Emmett. But when comparing it to its historical volatility, Saratoga Investment Corp is 4.0 times less risky than Douglas Emmett. It trades about 0.12 of its potential returns per unit of risk. Douglas Emmett is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,332 in Douglas Emmett on January 25, 2024 and sell it today you would earn a total of 26.00 from holding Douglas Emmett or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saratoga Investment Corp vs. Douglas Emmett
Performance |
| Timeline |
| Saratoga Investment Corp |
| Douglas Emmett |
Saratoga Investment and Douglas Emmett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saratoga Investment and Douglas Emmett
The main advantage of trading using opposite Saratoga Investment and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saratoga Investment 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.| Saratoga Investment vs. New Mountain Finance | Saratoga Investment vs. BlackRock TCP Capital | Saratoga Investment vs. Carlyle Secured Lending | Saratoga Investment vs. Sixth Street Specialty |
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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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