Correlation Between Boston Properties and One Liberty

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

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

Diversification Opportunities for Boston Properties and One Liberty

0.92

Correlation Coefficient

Boston Properties  One Liberty

Almost no diversification

The 3 months correlation between Boston and One is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and One Liberty Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Liberty Properties 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 One Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Liberty Properties has no effect on the direction of Boston Properties i.e., Boston Properties and One Liberty go up and down completely randomly.

Pair Corralation between Boston Properties and One Liberty

Considering the 90-day investment horizon Boston Properties is expected to generate 1.61 times more return on investment than One Liberty. However, Boston Properties is 1.61 times more volatile than One Liberty Properties. It trades about 0.04 of its potential returns per unit of risk. One Liberty Properties is currently generating about 0.06 per unit of risk. If you would invest  4,931  in Boston Properties on November 30, 2024 and sell it today you would earn a total of  2,162  from holding Boston Properties or generate 43.85% return on investment over 90 days.

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

Boston Properties  vs.  One Liberty Properties

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.

One Liberty Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Liberty Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's essential 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 Boston Properties and One Liberty

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

The idea behind Boston Properties and One Liberty 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.