Correlation Between Boston Properties and Gaming Leisure

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

Diversification Opportunities for Boston Properties and Gaming Leisure

BostonGamingDiversified AwayBostonGamingDiversified Away100%
0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Boston and Gaming is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Gaming Leisure Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Leisure Properties 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 Gaming Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Leisure Properties has no effect on the direction of Boston Properties i.e., Boston Properties and Gaming Leisure go up and down completely randomly.

Pair Corralation between Boston Properties and Gaming Leisure

Considering the 90-day investment horizon Boston Properties is expected to under-perform the Gaming Leisure. In addition to that, Boston Properties is 1.81 times more volatile than Gaming Leisure Properties. It trades about -0.09 of its total potential returns per unit of risk. Gaming Leisure Properties is currently generating about -0.04 per unit of volatility. If you would invest  4,915  in Gaming Leisure Properties on November 21, 2024 and sell it today you would lose (54.00) from holding Gaming Leisure Properties or give up 1.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Boston Properties  vs.  Gaming Leisure Properties

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50
JavaScript chart by amCharts 3.21.15BXP GLPI
       Timeline  
Boston Properties 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb687072747678808284
Gaming Leisure Properties 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Gaming Leisure Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Gaming Leisure is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb464748495051

Boston Properties and Gaming Leisure Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.34-2.5-1.66-0.820.00.751.52.263.02 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15BXP GLPI
       Returns  

Pair Trading with Boston Properties and Gaming Leisure

The main advantage of trading using opposite Boston Properties and Gaming Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Gaming Leisure 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 Gaming Leisure will offset losses from the drop in Gaming Leisure's long position.
The idea behind Boston Properties and Gaming Leisure Properties 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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