Correlation Between Boston Properties and Smart REIT
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Smart REIT 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 Smart REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Smart REIT, you can compare the effects of market volatilities on Boston Properties and Smart REIT 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 Smart REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Smart REIT.
Diversification Opportunities for Boston Properties and Smart REIT
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Smart is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Smart REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart 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 Smart REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart REIT has no effect on the direction of Boston Properties i.e., Boston Properties and Smart REIT go up and down completely randomly.
Pair Corralation between Boston Properties and Smart REIT
Considering the 90-day investment horizon Boston Properties is expected to under-perform the Smart REIT. In addition to that, Boston Properties is 1.39 times more volatile than Smart REIT. It trades about -0.13 of its total potential returns per unit of risk. Smart REIT is currently generating about 0.22 per unit of volatility. If you would invest 1,703 in Smart REIT on November 28, 2024 and sell it today you would earn a total of 116.00 from holding Smart REIT or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Boston Properties vs. Smart REIT
Performance |
| Timeline |
| Boston Properties |
| Smart REIT |
Boston Properties and Smart REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Smart REIT
The main advantage of trading using opposite Boston Properties and Smart REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Smart REIT 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 Smart REIT will offset losses from the drop in Smart REIT's long position.| Boston Properties vs. SL Green Realty | Boston Properties vs. Douglas Emmett | Boston Properties vs. Kilroy Realty Corp | Boston Properties vs. Alexandria Real Estate |
| Smart REIT vs. Firm Capital Property | Smart REIT vs. Slate Grocery REIT | Smart REIT vs. Phillips Edison Co | Smart REIT vs. Choice Properties Real |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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