Correlation Between Boston Properties and Crombie Real

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Can any of the company-specific risk be diversified away by investing in both Boston Properties and Crombie Real 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 Crombie Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Crombie Real Estate, you can compare the effects of market volatilities on Boston Properties and Crombie Real 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 Crombie Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Crombie Real.

Diversification Opportunities for Boston Properties and Crombie Real

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Boston and Crombie is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Crombie Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crombie Real Estate 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 Crombie Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crombie Real Estate has no effect on the direction of Boston Properties i.e., Boston Properties and Crombie Real go up and down completely randomly.

Pair Corralation between Boston Properties and Crombie Real

Considering the 90-day investment horizon Boston Properties is expected to generate 0.58 times more return on investment than Crombie Real. However, Boston Properties is 1.71 times less risky than Crombie Real. It trades about 0.04 of its potential returns per unit of risk. Crombie Real Estate is currently generating about 0.01 per unit of risk. If you would invest  5,967  in Boston Properties on September 2, 2024 and sell it today you would earn a total of  2,232  from holding Boston Properties or generate 37.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy63.91%
ValuesDaily Returns

Boston Properties  vs.  Crombie Real Estate

 Performance 
       Timeline  
Boston Properties 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Boston Properties may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Crombie Real Estate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Crombie Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Crombie Real is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Boston Properties and Crombie Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boston Properties and Crombie Real

The main advantage of trading using opposite Boston Properties and Crombie Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Crombie Real 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 Crombie Real will offset losses from the drop in Crombie Real's long position.
The idea behind Boston Properties and Crombie Real Estate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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