Correlation Between Equity Commonwealth and Boston Properties
Can any of the company-specific risk be diversified away by investing in both Equity Commonwealth and Boston 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 Equity Commonwealth and Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Commonwealth and Boston Properties, you can compare the effects of market volatilities on Equity Commonwealth and Boston 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 Equity Commonwealth with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Commonwealth and Boston Properties.
Diversification Opportunities for Equity Commonwealth and Boston Properties
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equity and Boston is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Equity Commonwealth and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Equity Commonwealth 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 Equity Commonwealth are associated (or correlated) with Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of Equity Commonwealth i.e., Equity Commonwealth and Boston Properties go up and down completely randomly.
Pair Corralation between Equity Commonwealth and Boston Properties
Assuming the 90 days trading horizon Equity Commonwealth is expected to generate 13.8 times less return on investment than Boston Properties. But when comparing it to its historical volatility, Equity Commonwealth is 14.14 times less risky than Boston Properties. It trades about 0.09 of its potential returns per unit of risk. Boston Properties is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,033 in Boston Properties on September 3, 2024 and sell it today you would earn a total of 166.00 from holding Boston Properties or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Commonwealth vs. Boston Properties
Performance |
| Timeline |
| Equity Commonwealth |
| Boston Properties |
Equity Commonwealth and Boston Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Commonwealth and Boston Properties
The main advantage of trading using opposite Equity Commonwealth and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Commonwealth position performs unexpectedly, Boston 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 Boston Properties will offset losses from the drop in Boston Properties' long position.| Equity Commonwealth vs. Cousins Properties Incorporated | Equity Commonwealth vs. Franklin Street Properties | Equity Commonwealth vs. Creative Media Community | Equity Commonwealth vs. Vornado Realty Trust |
| Boston Properties vs. Office Properties Income | Boston Properties vs. SL Green Realty | Boston Properties vs. Highwoods Properties | Boston Properties vs. Equity Commonwealth |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |