Correlation Between Boston Properties and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Analog Devices 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 Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Analog Devices, you can compare the effects of market volatilities on Boston Properties and Analog Devices 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 Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Analog Devices.
Diversification Opportunities for Boston Properties and Analog Devices
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Boston and Analog is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Boston Properties i.e., Boston Properties and Analog Devices go up and down completely randomly.
Pair Corralation between Boston Properties and Analog Devices
Considering the 90-day investment horizon Boston Properties is expected to generate 0.67 times more return on investment than Analog Devices. However, Boston Properties is 1.49 times less risky than Analog Devices. It trades about 0.13 of its potential returns per unit of risk. Analog Devices is currently generating about -0.07 per unit of risk. If you would invest 7,916 in Boston Properties on September 2, 2024 and sell it today you would earn a total of 283.00 from holding Boston Properties or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Analog Devices
Performance |
| Timeline |
| Boston Properties |
| Analog Devices |
Boston Properties and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Analog Devices
The main advantage of trading using opposite Boston Properties and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| Boston Properties vs. Douglas Emmett | Boston Properties vs. Vornado Realty Trust | Boston Properties vs. Highwoods Properties | Boston Properties vs. Piedmont Office Realty |
| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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