Correlation Between Boston Properties and Piedmont Office
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Piedmont Office 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 Piedmont Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Piedmont Office Realty, you can compare the effects of market volatilities on Boston Properties and Piedmont Office 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 Piedmont Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Piedmont Office.
Diversification Opportunities for Boston Properties and Piedmont Office
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Piedmont is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Piedmont Office Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Office Realty 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 Piedmont Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Office Realty has no effect on the direction of Boston Properties i.e., Boston Properties and Piedmont Office go up and down completely randomly.
Pair Corralation between Boston Properties and Piedmont Office
Considering the 90-day investment horizon Boston Properties is expected to under-perform the Piedmont Office. In addition to that, Boston Properties is 1.09 times more volatile than Piedmont Office Realty. It trades about -0.12 of its total potential returns per unit of risk. Piedmont Office Realty is currently generating about -0.05 per unit of volatility. If you would invest 996.00 in Piedmont Office Realty on August 29, 2024 and sell it today you would lose (18.00) from holding Piedmont Office Realty or give up 1.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Piedmont Office Realty
Performance |
| Timeline |
| Boston Properties |
| Piedmont Office Realty |
Boston Properties and Piedmont Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Piedmont Office
The main advantage of trading using opposite Boston Properties and Piedmont Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Piedmont Office 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 Piedmont Office will offset losses from the drop in Piedmont Office'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 |
| Piedmont Office vs. Highwoods Properties | Piedmont Office vs. Douglas Emmett | Piedmont Office vs. Kilroy Realty Corp | Piedmont Office vs. Cousins Properties Incorporated |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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