Correlation Between Boston Properties and Highlands REIT
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Highlands 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 Highlands 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 Highlands REIT, you can compare the effects of market volatilities on Boston Properties and Highlands 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 Highlands REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Highlands REIT.
Diversification Opportunities for Boston Properties and Highlands REIT
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Boston and Highlands is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Highlands REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlands 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 Highlands REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlands REIT has no effect on the direction of Boston Properties i.e., Boston Properties and Highlands REIT go up and down completely randomly.
Pair Corralation between Boston Properties and Highlands REIT
Considering the 90-day investment horizon Boston Properties is expected to under-perform the Highlands REIT. But the stock apears to be less risky and, when comparing its historical volatility, Boston Properties is 81.84 times less risky than Highlands REIT. The stock trades about -0.12 of its potential returns per unit of risk. The Highlands REIT is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Highlands REIT on August 29, 2024 and sell it today you would earn a total of 3.74 from holding Highlands REIT or generate 93.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Highlands REIT
Performance |
| Timeline |
| Boston Properties |
| Highlands REIT |
Boston Properties and Highlands REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Highlands REIT
The main advantage of trading using opposite Boston Properties and Highlands REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Highlands 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 Highlands REIT will offset losses from the drop in Highlands REIT's long position.| Boston Properties vs. Office Properties Income | Boston Properties vs. SL Green Realty | Boston Properties vs. Cousins Properties Incorporated | Boston Properties vs. Highwoods Properties |
| Highlands REIT vs. Boston Properties | Highlands REIT vs. Kilroy Realty Corp | Highlands REIT vs. SL Green Realty | Highlands REIT vs. Vornado Realty Trust |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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