Correlation Between Boston Properties and Great Portland

Can any of the company-specific risk be diversified away by investing in both Boston Properties and Great Portland 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 Great Portland into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boston Properties and Great Portland Estates, you can compare the effects of market volatilities on Boston Properties and Great Portland 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 Great Portland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Great Portland.

Diversification Opportunities for Boston Properties and Great Portland

-0.14

Correlation Coefficient

Boston Properties  Great Portland

Good diversification

The 3 months correlation between Boston and Great is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Great Portland Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Portland Estates 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 Great Portland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Portland Estates has no effect on the direction of Boston Properties i.e., Boston Properties and Great Portland go up and down completely randomly.

Pair Corralation between Boston Properties and Great Portland

Assuming the 90 days horizon Boston Properties is expected to generate 1.1 times more return on investment than Great Portland. However, Boston Properties is 1.1 times more volatile than Great Portland Estates. It trades about 0.03 of its potential returns per unit of risk. Great Portland Estates is currently generating about -0.2 per unit of risk. If you would invest  7,124  in Boston Properties on September 27, 2024 and sell it today you would earn a total of  144.00  from holding Boston Properties or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Boston Properties  vs.  Great Portland Estates

Boston Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Boston Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Great Portland Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great Portland Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Boston Properties and Great Portland

The main advantage of trading using opposite Boston Properties and Great Portland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Properties position performs unexpectedly, Great Portland 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 Great Portland will offset losses from the drop in Great Portland's long position.

The idea behind Boston Properties and Great Portland Estates pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.