Correlation Between Boston Properties and City Office
Can any of the company-specific risk be diversified away by investing in both Boston Properties 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 Boston Properties and City Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and City Office REIT, you can compare the effects of market volatilities on Boston Properties 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 Boston Properties with a short position of City Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and City Office.
Diversification Opportunities for Boston Properties and City Office
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and City is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and City Office REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Office REIT 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 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 REIT has no effect on the direction of Boston Properties i.e., Boston Properties and City Office go up and down completely randomly.
Pair Corralation between Boston Properties and City Office
Considering the 90-day investment horizon Boston Properties is expected to generate 1.35 times more return on investment than City Office. However, Boston Properties is 1.35 times more volatile than City Office REIT. It trades about 0.07 of its potential returns per unit of risk. City Office REIT is currently generating about 0.06 per unit of risk. If you would invest 6,095 in Boston Properties on September 2, 2024 and sell it today you would earn a total of 2,104 from holding Boston Properties or generate 34.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. City Office REIT
Performance |
| Timeline |
| Boston Properties |
| City Office REIT |
Boston Properties and City Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and City Office
The main advantage of trading using opposite Boston Properties and City Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties 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.| Boston Properties vs. Douglas Emmett | Boston Properties vs. Vornado Realty Trust | Boston Properties vs. Highwoods Properties | Boston Properties vs. Piedmont Office Realty |
| City Office vs. Vornado Realty Trust | City Office vs. Vornado Realty Trust | City Office vs. SL Green Realty | City Office vs. Hudson Pacific Properties |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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