Correlation Between Boston Properties and Cousins Properties

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

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

Diversification Opportunities for Boston Properties and Cousins Properties

0.5

Correlation Coefficient

Boston Properties  Cousins Properties

Very weak diversification

The 3 months correlation between Boston and Cousins is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Cousins Properties Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cousins Properties 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 Cousins Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cousins Properties has no effect on the direction of Boston Properties i.e., Boston Properties and Cousins Properties go up and down completely randomly.

Pair Corralation between Boston Properties and Cousins Properties

Considering the 90-day investment horizon Boston Properties is expected to generate 1.4 times more return on investment than Cousins Properties. However, Boston Properties is 1.4 times more volatile than Cousins Properties Incorporated. It trades about 0.04 of its potential returns per unit of risk. Cousins Properties Incorporated is currently generating about 0.0 per unit of risk. If you would invest  6,188  in Boston Properties on January 25, 2024 and sell it today you would earn a total of  105.00  from holding Boston Properties or generate 1.7% return on investment over 90 days.

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

Boston Properties  vs.  Cousins Properties Incorporate

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 latest fragile 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.

Cousins Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cousins Properties Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cousins Properties is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boston Properties and Cousins Properties

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

The idea behind Boston Properties and Cousins Properties Incorporated 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.