Correlation Between Boston Properties and Transocean
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Transocean 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 Transocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Transocean, you can compare the effects of market volatilities on Boston Properties and Transocean 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 Transocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Transocean.
Diversification Opportunities for Boston Properties and Transocean
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and Transocean is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Boston Properties i.e., Boston Properties and Transocean go up and down completely randomly.
Pair Corralation between Boston Properties and Transocean
Considering the 90-day investment horizon Boston Properties is expected to generate 0.67 times more return on investment than Transocean. However, Boston Properties is 1.5 times less risky than Transocean. It trades about -0.03 of its potential returns per unit of risk. Transocean is currently generating about -0.14 per unit of risk. If you would invest 7,319 in Boston Properties on November 30, 2024 and sell it today you would lose (226.00) from holding Boston Properties or give up 3.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Transocean
Performance |
| Timeline |
| Boston Properties |
| Transocean |
Boston Properties and Transocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Transocean
The main advantage of trading using opposite Boston Properties and Transocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Transocean 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 Transocean will offset losses from the drop in Transocean'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 |
| Transocean vs. Timken Company | Transocean vs. Snap On | Transocean vs. Eastman Kodak Co | Transocean vs. JD Sports Fashion |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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