Correlation Between Office Properties and Boston Properties
Can any of the company-specific risk be diversified away by investing in both Office Properties 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 Office Properties and Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Office Properties Income and Boston Properties, you can compare the effects of market volatilities on Office Properties 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 Office Properties with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Office Properties and Boston Properties.
Diversification Opportunities for Office Properties and Boston Properties
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Office and Boston is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Office Properties Income and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Office 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 Office Properties Income 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 Office Properties i.e., Office Properties and Boston Properties go up and down completely randomly.
Pair Corralation between Office Properties and Boston Properties
Assuming the 90 days trading horizon Office Properties Income is expected to under-perform the Boston Properties. In addition to that, Office Properties is 3.31 times more volatile than Boston Properties. It trades about -0.05 of its total potential returns per unit of risk. Boston Properties is currently generating about 0.08 per unit of volatility. If you would invest 5,589 in Boston Properties on September 3, 2024 and sell it today you would earn a total of 2,147 from holding Boston Properties or generate 38.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Office Properties Income vs. Boston Properties
Performance |
| Timeline |
| Office Properties Income |
| Boston Properties |
Office Properties and Boston Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Office Properties and Boston Properties
The main advantage of trading using opposite Office Properties and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Office Properties 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.| Office Properties vs. Boston Properties | Office Properties vs. COUSINS PTIES INC | Office Properties vs. CREMECOMTRSBI DL 001 |
| Boston Properties vs. USWE SPORTS AB | Boston Properties vs. Fukuyama Transporting Co | Boston Properties vs. SCIENCE IN SPORT | Boston Properties vs. CarsalesCom |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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