Correlation Between CREMECOMTRSBI and Boston Properties

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

By analyzing existing cross correlation between CREMECOMTRSBI DL 001 and Boston Properties, you can compare the effects of market volatilities on CREMECOMTRSBI 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 CREMECOMTRSBI with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREMECOMTRSBI and Boston Properties.

Diversification Opportunities for CREMECOMTRSBI and Boston Properties

-0.73

Correlation Coefficient

CREMECOMTRSBI  Boston Properties

Pay attention - limited upside

The 3 months correlation between CREMECOMTRSBI and Boston is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding CREMECOMTRSBI DL 001 and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and CREMECOMTRSBI 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 CREMECOMTRSBI DL 001 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 CREMECOMTRSBI i.e., CREMECOMTRSBI and Boston Properties go up and down completely randomly.

Pair Corralation between CREMECOMTRSBI and Boston Properties

Assuming the 90 days trading horizon CREMECOMTRSBI DL 001 is expected to under-perform the Boston Properties. In addition to that, CREMECOMTRSBI is 19.06 times more volatile than Boston Properties. It trades about -0.05 of its total potential returns per unit of risk. Boston Properties is currently generating about 0.18 per unit of volatility. If you would invest  6,587  in Boston Properties on September 3, 2024 and sell it today you would earn a total of  1,149  from holding Boston Properties or generate 17.44% return on investment over 90 days.

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

CREMECOMTRSBI DL 001  vs.  Boston Properties

CREMECOMTRSBI DL 001

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CREMECOMTRSBI DL 001 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 basic indicators 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.

Boston Properties

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Boston Properties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CREMECOMTRSBI and Boston Properties

The main advantage of trading using opposite CREMECOMTRSBI and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CREMECOMTRSBI 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 CREMECOMTRSBI DL 001 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.