Correlation Between Boston Properties and America Great

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

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

Diversification Opportunities for Boston Properties and America Great

-0.68

Correlation Coefficient

Boston Properties  America Great

Excellent diversification

The 3 months correlation between Boston and America is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and America Great Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Great Health and Boston Properties 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 Properties are associated (or correlated) with America Great. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Great Health has no effect on the direction of Boston Properties i.e., Boston Properties and America Great go up and down completely randomly.

Pair Corralation between Boston Properties and America Great

Considering the 90-day investment horizon Boston Properties is expected to under-perform the America Great. But the stock apears to be less risky and, when comparing its historical volatility, Boston Properties is 27.57 times less risky than America Great. The stock trades about -0.05 of its potential returns per unit of risk. The America Great Health is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.01  in America Great Health on December 28, 2024 and sell it today you would earn a total of  0.05  from holding America Great Health or generate 500.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Boston Properties  vs.  America Great Health

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.

America Great Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in America Great Health are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, America Great demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Properties and America Great

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

The idea behind Boston Properties and America Great Health 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.