Correlation Between Alexandria Real and Boston Properties
Can any of the company-specific risk be diversified away by investing in both Alexandria Real 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 Alexandria Real and Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alexandria Real Estate and Boston Properties, you can compare the effects of market volatilities on Alexandria Real 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 Alexandria Real with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alexandria Real and Boston Properties.
Diversification Opportunities for Alexandria Real and Boston Properties
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alexandria and Boston is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alexandria Real Estate and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Alexandria Real 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 Alexandria Real Estate 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 Alexandria Real i.e., Alexandria Real and Boston Properties go up and down completely randomly.
Pair Corralation between Alexandria Real and Boston Properties
Considering the 90-day investment horizon Alexandria Real Estate is expected to under-perform the Boston Properties. But the stock apears to be less risky and, when comparing its historical volatility, Alexandria Real Estate is 1.36 times less risky than Boston Properties. The stock trades about -0.09 of its potential returns per unit of risk. The Boston Properties is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,188 in Boston Properties on January 25, 2024 and sell it today you would earn a total of 109.00 from holding Boston Properties or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alexandria Real Estate vs. Boston Properties
Performance |
| Timeline |
| Alexandria Real Estate |
| Boston Properties |
Alexandria Real and Boston Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alexandria Real and Boston Properties
The main advantage of trading using opposite Alexandria Real and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alexandria Real 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.| Alexandria Real vs. Equity Commonwealth | Alexandria Real vs. Piedmont Office Realty | Alexandria Real vs. Hudson Pacific Properties |
| Boston Properties vs. Equity Commonwealth | Boston Properties vs. Piedmont Office Realty | Boston Properties vs. Hudson Pacific Properties |
Check out your portfolio center.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.
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