Correlation Between Boston Omaha and SIMON

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

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

Diversification Opportunities for Boston Omaha and SIMON

-0.59

Correlation Coefficient

Boston Omaha  SIMON

Excellent diversification

The 3 months correlation between Boston and SIMON is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Boston Omaha Corp and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP and Boston Omaha 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 Omaha Corp are associated (or correlated) with SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Boston Omaha i.e., Boston Omaha and SIMON go up and down completely randomly.

Pair Corralation between Boston Omaha and SIMON

Considering the 90-day investment horizon Boston Omaha Corp is expected to generate 0.36 times more return on investment than SIMON. However, Boston Omaha Corp is 2.77 times less risky than SIMON. It trades about 0.05 of its potential returns per unit of risk. SIMON PPTY GROUP is currently generating about -0.3 per unit of risk. If you would invest  1,427  in Boston Omaha Corp on October 25, 2024 and sell it today you would earn a total of  21.00  from holding Boston Omaha Corp or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Boston Omaha Corp  vs.  SIMON PPTY GROUP

Boston Omaha Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Omaha Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Boston Omaha is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

SIMON PPTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for SIMON PPTY GROUP investors.

Pair Trading with Boston Omaha and SIMON

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

The idea behind Boston Omaha Corp and SIMON PPTY GROUP 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.