Correlation Between Boston Properties and Welltower
Can any of the company-specific risk be diversified away by investing in both Boston Properties and Welltower 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 Welltower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Properties and Welltower, you can compare the effects of market volatilities on Boston Properties and Welltower 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 Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Welltower.
Diversification Opportunities for Boston Properties and Welltower
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and Welltower is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of Boston Properties i.e., Boston Properties and Welltower go up and down completely randomly.
Pair Corralation between Boston Properties and Welltower
Considering the 90-day investment horizon Boston Properties is expected to under-perform the Welltower. In addition to that, Boston Properties is 1.39 times more volatile than Welltower. It trades about -0.1 of its total potential returns per unit of risk. Welltower is currently generating about 0.08 per unit of volatility. If you would invest 13,666 in Welltower on August 30, 2024 and sell it today you would earn a total of 264.00 from holding Welltower or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Properties vs. Welltower
Performance |
| Timeline |
| Boston Properties |
| Welltower |
Boston Properties and Welltower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Properties and Welltower
The main advantage of trading using opposite Boston Properties and Welltower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Welltower 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 Welltower will offset losses from the drop in Welltower'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 |
| Welltower vs. Boston Properties | Welltower vs. Douglas Emmett | Welltower vs. Kilroy Realty Corp | Welltower vs. Alexandria Real Estate |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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