Correlation Between Boston Properties and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Boston Properties and SMA Solar 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 Boston Properties and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and SMA Solar Technology, you can compare the effects of market volatilities on Boston Properties and SMA Solar 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 Boston Properties with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and SMA Solar.
Diversification Opportunities for Boston Properties and SMA Solar
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and SMA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and Boston Properties 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 Boston Properties are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Boston Properties i.e., Boston Properties and SMA Solar go up and down completely randomly.
Pair Corralation between Boston Properties and SMA Solar
Assuming the 90 days trading horizon Boston Properties is expected to generate 0.37 times more return on investment than SMA Solar. However, Boston Properties is 2.67 times less risky than SMA Solar. It trades about 0.14 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.12 per unit of risk. If you would invest 7,926 in Boston Properties on September 2, 2024 and sell it today you would earn a total of 416.00 from holding Boston Properties or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. SMA Solar Technology
Performance |
| Timeline |
| Boston Properties |
| SMA Solar Technology |
Boston Properties and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and SMA Solar
The main advantage of trading using opposite Boston Properties and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Boston Properties vs. Gaztransport et Technigaz | Boston Properties vs. Cairn Homes PLC | Boston Properties vs. Beazer Homes USA | Boston Properties vs. Fortune Brands Home |
| SMA Solar vs. Uniper SE | SMA Solar vs. Mulberry Group PLC | SMA Solar vs. London Security Plc | SMA Solar vs. Triad Group PLC |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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