Correlation Between American Healthcare and Boston Properties
Can any of the company-specific risk be diversified away by investing in both American Healthcare and Boston Properties 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 American Healthcare and Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Healthcare REIT, and Boston Properties, you can compare the effects of market volatilities on American Healthcare and Boston Properties 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 American Healthcare with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Healthcare and Boston Properties.
Diversification Opportunities for American Healthcare and Boston Properties
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Boston is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Healthcare REIT, and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and American Healthcare 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 American Healthcare REIT, are associated (or correlated) with Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of American Healthcare i.e., American Healthcare and Boston Properties go up and down completely randomly.
Pair Corralation between American Healthcare and Boston Properties
Considering the 90-day investment horizon American Healthcare REIT, is expected to generate 0.79 times more return on investment than Boston Properties. However, American Healthcare REIT, is 1.27 times less risky than Boston Properties. It trades about 0.25 of its potential returns per unit of risk. Boston Properties is currently generating about 0.09 per unit of risk. If you would invest 1,265 in American Healthcare REIT, on August 24, 2024 and sell it today you would earn a total of 1,597 from holding American Healthcare REIT, or generate 126.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.8% |
| Values | Daily Returns |
American Healthcare REIT, vs. Boston Properties
Performance |
| Timeline |
| American Healthcare REIT, |
| Boston Properties |
American Healthcare and Boston Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Healthcare and Boston Properties
The main advantage of trading using opposite American Healthcare and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Healthcare position performs unexpectedly, Boston Properties 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 Boston Properties will offset losses from the drop in Boston Properties' long position.| American Healthcare vs. Healthcare Realty Trust | American Healthcare vs. Welltower | American Healthcare vs. Diversified Healthcare Trust | American Healthcare vs. Healthpeak Properties |
| Boston Properties vs. SL Green Realty | Boston Properties vs. Douglas Emmett | Boston Properties vs. Kilroy Realty Corp | Boston Properties vs. Alexandria Real Estate |
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 Stocks Directory module to find actively traded stocks across global markets.
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