Correlation Between Boston Properties and Douglas Emmett
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Douglas Emmett 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 Douglas Emmett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Douglas Emmett, you can compare the effects of market volatilities on Boston Properties and Douglas Emmett 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 Douglas Emmett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Douglas Emmett.
Diversification Opportunities for Boston Properties and Douglas Emmett
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Douglas is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett 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 Douglas Emmett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Emmett has no effect on the direction of Boston Properties i.e., Boston Properties and Douglas Emmett go up and down completely randomly.
Pair Corralation between Boston Properties and Douglas Emmett
Considering the 90-day investment horizon Boston Properties is expected to under-perform the Douglas Emmett. But the stock apears to be less risky and, when comparing its historical volatility, Boston Properties is 1.21 times less risky than Douglas Emmett. The stock trades about -0.2 of its potential returns per unit of risk. The Douglas Emmett is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,836 in Douglas Emmett on August 24, 2024 and sell it today you would earn a total of 67.00 from holding Douglas Emmett or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Douglas Emmett
Performance |
| Timeline |
| Boston Properties |
| Douglas Emmett |
Boston Properties and Douglas Emmett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Douglas Emmett
The main advantage of trading using opposite Boston Properties and Douglas Emmett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Douglas Emmett 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 Douglas Emmett will offset losses from the drop in Douglas Emmett'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 |
| Douglas Emmett vs. Brandywine Realty Trust | Douglas Emmett vs. Kilroy Realty Corp | Douglas Emmett vs. Piedmont Office Realty | Douglas Emmett vs. City Office |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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