Correlation Between Armada Hflr and Boston Properties

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

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

Diversification Opportunities for Armada Hflr and Boston Properties

0.87

Correlation Coefficient

Armada Hflr  Boston Properties

Very poor diversification

The 3 months correlation between Armada and Boston is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Armada Hflr 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 Armada Hflr Pr 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 Armada Hflr i.e., Armada Hflr and Boston Properties go up and down completely randomly.

Pair Corralation between Armada Hflr and Boston Properties

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.7 times more return on investment than Boston Properties. However, Armada Hflr Pr is 1.42 times less risky than Boston Properties. It trades about -0.13 of its potential returns per unit of risk. Boston Properties is currently generating about -0.14 per unit of risk. If you would invest  1,088  in Armada Hflr Pr on October 24, 2024 and sell it today you would lose (112.00) from holding Armada Hflr Pr or give up 10.29% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  Boston Properties

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Armada Hflr and Boston Properties

The main advantage of trading using opposite Armada Hflr and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr 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 Armada Hflr Pr 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.