Correlation Between SCIENCE IN and Boston Properties

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

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

Diversification Opportunities for SCIENCE IN and Boston Properties

0.11

Correlation Coefficient

SCIENCE IN  Boston Properties

Average diversification

The 3 months correlation between SCIENCE and Boston is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding SCIENCE IN SPORT and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and SCIENCE IN 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 SCIENCE IN SPORT 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 SCIENCE IN i.e., SCIENCE IN and Boston Properties go up and down completely randomly.

Pair Corralation between SCIENCE IN and Boston Properties

Assuming the 90 days horizon SCIENCE IN SPORT is expected to generate 2.35 times more return on investment than Boston Properties. However, SCIENCE IN is 2.35 times more volatile than Boston Properties. It trades about 0.05 of its potential returns per unit of risk. Boston Properties is currently generating about -0.08 per unit of risk. If you would invest  30.00  in SCIENCE IN SPORT on December 1, 2024 and sell it today you would earn a total of  2.00  from holding SCIENCE IN SPORT or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

SCIENCE IN SPORT  vs.  Boston Properties

SCIENCE IN SPORT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCIENCE IN SPORT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SCIENCE IN reported solid returns over the last few months and may actually be approaching a breakup point.

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. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SCIENCE IN and Boston Properties

The main advantage of trading using opposite SCIENCE IN and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCIENCE IN 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 SCIENCE IN SPORT 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.