Correlation Between SunLink Health and Boston Properties
Can any of the company-specific risk be diversified away by investing in both SunLink Health 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 SunLink Health and Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunLink Health Systems and Boston Properties, you can compare the effects of market volatilities on SunLink Health 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 SunLink Health with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunLink Health and Boston Properties.
Diversification Opportunities for SunLink Health and Boston Properties
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SunLink and Boston is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding SunLink Health Systems and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and SunLink Health 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 SunLink Health Systems 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 SunLink Health i.e., SunLink Health and Boston Properties go up and down completely randomly.
Pair Corralation between SunLink Health and Boston Properties
Considering the 90-day investment horizon SunLink Health Systems is expected to generate 1.84 times more return on investment than Boston Properties. However, SunLink Health is 1.84 times more volatile than Boston Properties. It trades about 0.02 of its potential returns per unit of risk. Boston Properties is currently generating about 0.04 per unit of risk. If you would invest 82.00 in SunLink Health Systems on September 2, 2024 and sell it today you would earn a total of 4.00 from holding SunLink Health Systems or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunLink Health Systems vs. Boston Properties
Performance |
| Timeline |
| SunLink Health Systems |
| Boston Properties |
SunLink Health and Boston Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunLink Health and Boston Properties
The main advantage of trading using opposite SunLink Health and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunLink Health 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.| SunLink Health vs. Humana Inc | SunLink Health vs. Cigna Corp | SunLink Health vs. Elevance Health | SunLink Health vs. Centene Corp |
| Boston Properties vs. Douglas Emmett | Boston Properties vs. Vornado Realty Trust | Boston Properties vs. Highwoods Properties | Boston Properties vs. Piedmont Office Realty |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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