Correlation Between BTB Real and Boston Properties

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

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

Diversification Opportunities for BTB Real and Boston Properties

0.53

Correlation Coefficient

BTB Real  Boston Properties

Very weak diversification

The 3 months correlation between BTB and Boston is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding BTB Real Estate and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and BTB Real 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 BTB Real Estate 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 BTB Real i.e., BTB Real and Boston Properties go up and down completely randomly.

Pair Corralation between BTB Real and Boston Properties

Assuming the 90 days horizon BTB Real Estate is expected to generate 0.45 times more return on investment than Boston Properties. However, BTB Real Estate is 2.23 times less risky than Boston Properties. It trades about 0.07 of its potential returns per unit of risk. Boston Properties is currently generating about -0.05 per unit of risk. If you would invest  235.00  in BTB Real Estate on December 27, 2024 and sell it today you would earn a total of  7.00  from holding BTB Real Estate or generate 2.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.89%
Values	Daily Returns

BTB Real Estate  vs.  Boston Properties

BTB Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BTB Real Estate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, BTB Real is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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. 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.

Pair Trading with BTB Real and Boston Properties

The main advantage of trading using opposite BTB Real and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTB Real 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 BTB Real Estate 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.