Correlation Between Boston Properties and Artis REIT

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

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

Diversification Opportunities for Boston Properties and Artis REIT

0.79

Correlation Coefficient

Boston Properties  Artis REIT

Poor diversification

The 3 months correlation between Boston and Artis is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Artis REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artis REIT 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 Artis REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artis REIT has no effect on the direction of Boston Properties i.e., Boston Properties and Artis REIT go up and down completely randomly.

Pair Corralation between Boston Properties and Artis REIT

Considering the 90-day investment horizon Boston Properties is expected to generate 1.34 times more return on investment than Artis REIT. However, Boston Properties is 1.34 times more volatile than Artis REIT. It trades about 0.13 of its potential returns per unit of risk. Artis REIT is currently generating about 0.08 per unit of risk. If you would invest  7,342  in Boston Properties on September 2, 2024 and sell it today you would earn a total of  857.00  from holding Boston Properties or generate 11.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Boston Properties  vs.  Artis REIT

Boston Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Boston Properties may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Artis REIT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Artis REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Artis REIT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boston Properties and Artis REIT

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

The idea behind Boston Properties and Artis REIT 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.