Correlation Between Ventas and Boston Properties

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

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

Diversification Opportunities for Ventas and Boston Properties

0.39

Correlation Coefficient

Ventas  Boston Properties

Weak diversification

The 3 months correlation between Ventas and Boston is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ventas Inc and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Ventas 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 Ventas 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 Ventas i.e., Ventas and Boston Properties go up and down completely randomly.

Pair Corralation between Ventas and Boston Properties

Considering the 90-day investment horizon Ventas Inc is expected to under-perform the Boston Properties. But the stock apears to be less risky and, when comparing its historical volatility, Ventas Inc is 1.41 times less risky than Boston Properties. The stock trades about -0.33 of its potential returns per unit of risk. The Boston Properties is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,841  in Boston Properties on September 17, 2024 and sell it today you would earn a total of  152.00  from holding Boston Properties or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ventas Inc  vs.  Boston Properties

Ventas Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ventas Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Boston Properties

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Boston Properties is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ventas and Boston Properties

The main advantage of trading using opposite Ventas and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ventas 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 Ventas 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.