Correlation Between Smith Douglas and Boston Properties
Can any of the company-specific risk be diversified away by investing in both Smith Douglas 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 Smith Douglas and Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Douglas Homes and Boston Properties, you can compare the effects of market volatilities on Smith Douglas 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 Smith Douglas with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Douglas and Boston Properties.
Diversification Opportunities for Smith Douglas and Boston Properties
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Smith and Boston is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Smith Douglas Homes and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Smith Douglas 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 Smith Douglas Homes 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 Smith Douglas i.e., Smith Douglas and Boston Properties go up and down completely randomly.
Pair Corralation between Smith Douglas and Boston Properties
Given the investment horizon of 90 days Smith Douglas Homes is expected to generate 2.47 times more return on investment than Boston Properties. However, Smith Douglas is 2.47 times more volatile than Boston Properties. It trades about -0.01 of its potential returns per unit of risk. Boston Properties is currently generating about -0.02 per unit of risk. If you would invest 3,430 in Smith Douglas Homes on August 31, 2024 and sell it today you would lose (60.00) from holding Smith Douglas Homes or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smith Douglas Homes vs. Boston Properties
Performance |
| Timeline |
| Smith Douglas Homes |
| Boston Properties |
Smith Douglas and Boston Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Douglas and Boston Properties
The main advantage of trading using opposite Smith Douglas and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Douglas 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.| Smith Douglas vs. EMCOR Group | Smith Douglas vs. CenterPoint Energy | Smith Douglas vs. Highway Holdings Limited | Smith Douglas vs. United Utilities Group |
| Boston Properties vs. SL Green Realty | Boston Properties vs. Douglas Emmett | Boston Properties vs. Kilroy Realty Corp | Boston Properties 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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