Correlation Between Boston Properties and Magna International
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Magna International 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 Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Magna International, you can compare the effects of market volatilities on Boston Properties and Magna International 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 Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Magna International.
Diversification Opportunities for Boston Properties and Magna International
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Boston and Magna is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International 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 Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Boston Properties i.e., Boston Properties and Magna International go up and down completely randomly.
Pair Corralation between Boston Properties and Magna International
Considering the 90-day investment horizon Boston Properties is expected to generate 3.08 times less return on investment than Magna International. But when comparing it to its historical volatility, Boston Properties is 1.37 times less risky than Magna International. It trades about 0.05 of its potential returns per unit of risk. Magna International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,227 in Magna International on August 28, 2024 and sell it today you would earn a total of 419.00 from holding Magna International or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Magna International
Performance |
| Timeline |
| Boston Properties |
| Magna International |
Boston Properties and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Magna International
The main advantage of trading using opposite Boston Properties and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's 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 |
| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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