Correlation Between Boston Properties and Highwoods Properties
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Highwoods Properties 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 Highwoods Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Highwoods Properties, you can compare the effects of market volatilities on Boston Properties and Highwoods Properties 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 Highwoods Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Highwoods Properties.
Diversification Opportunities for Boston Properties and Highwoods Properties
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Boston and Highwoods is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Highwoods Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwoods 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 Highwoods Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwoods Properties has no effect on the direction of Boston Properties i.e., Boston Properties and Highwoods Properties go up and down completely randomly.
Pair Corralation between Boston Properties and Highwoods Properties
Considering the 90-day investment horizon Boston Properties is expected to generate 1.32 times more return on investment than Highwoods Properties. However, Boston Properties is 1.32 times more volatile than Highwoods Properties. It trades about -0.2 of its potential returns per unit of risk. Highwoods Properties is currently generating about -0.36 per unit of risk. If you would invest 8,696 in Boston Properties on August 24, 2024 and sell it today you would lose (619.00) from holding Boston Properties or give up 7.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Highwoods Properties
Performance |
| Timeline |
| Boston Properties |
| Highwoods Properties |
Boston Properties and Highwoods Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Highwoods Properties
The main advantage of trading using opposite Boston Properties and Highwoods Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Highwoods Properties 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 Highwoods Properties will offset losses from the drop in Highwoods Properties' 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 |
| Highwoods Properties vs. Piedmont Office Realty | Highwoods Properties vs. Douglas Emmett | Highwoods Properties vs. Kilroy Realty Corp | Highwoods Properties vs. Hudson Pacific Properties |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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