Correlation Between Boston Properties and Empire State

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

By analyzing existing cross correlation between Boston Properties and Empire State Realty, you can compare the effects of market volatilities on Boston Properties and Empire State 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 Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and Empire State.

Diversification Opportunities for Boston Properties and Empire State

0.65

Correlation Coefficient

Boston Properties  Empire State

Poor diversification

The 3 months correlation between Boston and Empire is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty 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 Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of Boston Properties i.e., Boston Properties and Empire State go up and down completely randomly.

Pair Corralation between Boston Properties and Empire State

Considering the 90-day investment horizon Boston Properties is expected to generate 0.97 times more return on investment than Empire State. However, Boston Properties is 1.03 times less risky than Empire State. It trades about -0.05 of its potential returns per unit of risk. Empire State Realty is currently generating about -0.18 per unit of risk. If you would invest  7,362  in Boston Properties on December 27, 2024 and sell it today you would lose (511.00) from holding Boston Properties or give up 6.94% of portfolio value over 90 days.

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

Boston Properties  vs.  Empire State Realty

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 relatively invariable basic indicators, Boston Properties is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Empire State Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire State Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Boston Properties and Empire State

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

The idea behind Boston Properties and Empire State Realty 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..