Correlation Between Boston Properties and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Iridium Communications 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 Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Iridium Communications, you can compare the effects of market volatilities on Boston Properties and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Iridium Communications.
Diversification Opportunities for Boston Properties and Iridium Communications
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Iridium is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Boston Properties i.e., Boston Properties and Iridium Communications go up and down completely randomly.
Pair Corralation between Boston Properties and Iridium Communications
Considering the 90-day investment horizon Boston Properties is expected to generate 0.52 times more return on investment than Iridium Communications. However, Boston Properties is 1.91 times less risky than Iridium Communications. It trades about 0.13 of its potential returns per unit of risk. Iridium Communications is currently generating about 0.04 per unit of risk. If you would invest 7,916 in Boston Properties on September 2, 2024 and sell it today you would earn a total of 283.00 from holding Boston Properties or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Iridium Communications
Performance |
| Timeline |
| Boston Properties |
| Iridium Communications |
Boston Properties and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Iridium Communications
The main advantage of trading using opposite Boston Properties and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Boston Properties vs. Douglas Emmett | Boston Properties vs. Vornado Realty Trust | Boston Properties vs. Highwoods Properties | Boston Properties vs. Piedmont Office Realty |
| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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