Correlation Between Sealed Air and Boston Properties

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

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

Diversification Opportunities for Sealed Air and Boston Properties

0.78

Correlation Coefficient

Sealed Air  Boston Properties

Poor diversification

The 3 months correlation between Sealed and Boston is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Sealed Air 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 Sealed Air Corp 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 Sealed Air i.e., Sealed Air and Boston Properties go up and down completely randomly.

Pair Corralation between Sealed Air and Boston Properties

Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Boston Properties. In addition to that, Sealed Air is 1.08 times more volatile than Boston Properties. It trades about -0.1 of its total potential returns per unit of risk. Boston Properties is currently generating about -0.06 per unit of volatility. If you would invest  7,476  in Boston Properties on December 24, 2024 and sell it today you would lose (590.00) from holding Boston Properties or give up 7.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.32%
Values	Daily Returns

Sealed Air Corp  vs.  Boston Properties

Sealed Air Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sealed Air Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Boston Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sealed Air and Boston Properties

The main advantage of trading using opposite Sealed Air and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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 Sealed Air Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.