Correlation Between Boston Properties and Empire State
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Empire State 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 Empire State into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Empire State Realty, you can compare the effects of market volatilities on Boston Properties and Empire State 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 Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Empire State.
Diversification Opportunities for Boston Properties and Empire State
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and Empire is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty 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 Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of Boston Properties i.e., Boston Properties and Empire State go up and down completely randomly.
Pair Corralation between Boston Properties and Empire State
Considering the 90-day investment horizon Boston Properties is expected to generate 2.45 times less return on investment than Empire State. But when comparing it to its historical volatility, Boston Properties is 1.75 times less risky than Empire State. It trades about 0.13 of its potential returns per unit of risk. Empire State Realty is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,033 in Empire State Realty on September 2, 2024 and sell it today you would earn a total of 78.00 from holding Empire State Realty or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Boston Properties vs. Empire State Realty
Performance |
| Timeline |
| Boston Properties |
| Empire State Realty |
Boston Properties and Empire State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Empire State
The main advantage of trading using opposite Boston Properties and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Empire State 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 Empire State will offset losses from the drop in Empire State'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 |
| Empire State vs. Douglas Emmett | Empire State vs. Vornado Realty Trust | Empire State vs. Highwoods Properties | Empire State vs. Piedmont Office Realty |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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