Correlation Between Boston Properties and ANHEUSER

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Can any of the company-specific risk be diversified away by investing in both Boston Properties and ANHEUSER 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 ANHEUSER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and ANHEUSER BUSCH INBEV WORLDWIDE, you can compare the effects of market volatilities on Boston Properties and ANHEUSER 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 ANHEUSER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and ANHEUSER.

Diversification Opportunities for Boston Properties and ANHEUSER

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Boston and ANHEUSER is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and ANHEUSER BUSCH INBEV WORLDWIDE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANHEUSER BUSCH INBEV 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 ANHEUSER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANHEUSER BUSCH INBEV has no effect on the direction of Boston Properties i.e., Boston Properties and ANHEUSER go up and down completely randomly.

Pair Corralation between Boston Properties and ANHEUSER

Considering the 90-day investment horizon Boston Properties is expected to generate 1.54 times more return on investment than ANHEUSER. However, Boston Properties is 1.54 times more volatile than ANHEUSER BUSCH INBEV WORLDWIDE. It trades about 0.01 of its potential returns per unit of risk. ANHEUSER BUSCH INBEV WORLDWIDE is currently generating about -0.11 per unit of risk. If you would invest  8,275  in Boston Properties on August 31, 2024 and sell it today you would earn a total of  11.00  from holding Boston Properties or generate 0.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Boston Properties  vs.  ANHEUSER BUSCH INBEV WORLDWIDE

 Performance 
       Timeline  
Boston Properties 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Boston Properties reported solid returns over the last few months and may actually be approaching a breakup point.
ANHEUSER BUSCH INBEV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ANHEUSER BUSCH INBEV WORLDWIDE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ANHEUSER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Boston Properties and ANHEUSER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boston Properties and ANHEUSER

The main advantage of trading using opposite Boston Properties and ANHEUSER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, ANHEUSER 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 ANHEUSER will offset losses from the drop in ANHEUSER's long position.
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The idea behind Boston Properties and ANHEUSER BUSCH INBEV WORLDWIDE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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