Correlation Between Boston Properties and Office Properties
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Office 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 Office 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 Office Properties Income, you can compare the effects of market volatilities on Boston Properties and Office 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 Office Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Office Properties.
Diversification Opportunities for Boston Properties and Office Properties
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and Office is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Office Properties Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Office Properties Income 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 Office Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Office Properties Income has no effect on the direction of Boston Properties i.e., Boston Properties and Office Properties go up and down completely randomly.
Pair Corralation between Boston Properties and Office Properties
Considering the 90-day investment horizon Boston Properties is expected to generate 0.5 times more return on investment than Office Properties. However, Boston Properties is 2.01 times less risky than Office Properties. It trades about 0.04 of its potential returns per unit of risk. Office Properties Income is currently generating about -0.08 per unit of risk. If you would invest 5,982 in Boston Properties on August 25, 2024 and sell it today you would earn a total of 2,084 from holding Boston Properties or generate 34.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Office Properties Income
Performance |
| Timeline |
| Boston Properties |
| Office Properties Income |
Boston Properties and Office Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Office Properties
The main advantage of trading using opposite Boston Properties and Office Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Office 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 Office Properties will offset losses from the drop in Office 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 |
| Office Properties vs. Hudson Pacific Properties | Office Properties vs. Piedmont Office Realty | Office Properties vs. City Office | Office Properties vs. Kilroy Realty Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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