Correlation Between 26875PAU5 and Boston Properties

Can any of the company-specific risk be diversified away by investing in both 26875PAU5 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 26875PAU5 and Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EOG RESOURCES INC and Boston Properties, you can compare the effects of market volatilities on 26875PAU5 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 26875PAU5 with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of 26875PAU5 and Boston Properties.

Diversification Opportunities for 26875PAU5 and Boston Properties

0.33

Correlation Coefficient

26875PAU5  Boston Properties

Weak diversification

The 3 months correlation between 26875PAU5 and Boston is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding EOG RESOURCES INC and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and 26875PAU5 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 EOG RESOURCES INC 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 26875PAU5 i.e., 26875PAU5 and Boston Properties go up and down completely randomly.

Pair Corralation between 26875PAU5 and Boston Properties

Assuming the 90 days trading horizon EOG RESOURCES INC is expected to generate 0.24 times more return on investment than Boston Properties. However, EOG RESOURCES INC is 4.13 times less risky than Boston Properties. It trades about 0.06 of its potential returns per unit of risk. Boston Properties is currently generating about -0.19 per unit of risk. If you would invest  9,824  in EOG RESOURCES INC on September 27, 2024 and sell it today you would earn a total of  60.00  from holding EOG RESOURCES INC or generate 0.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

EOG RESOURCES INC  vs.  Boston Properties

EOG RESOURCES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOG RESOURCES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26875PAU5 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Boston Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Boston Properties is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with 26875PAU5 and Boston Properties

The main advantage of trading using opposite 26875PAU5 and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 26875PAU5 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.

The idea behind EOG RESOURCES INC and Boston Properties 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.