Correlation Between Boston Properties and Pinterest

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

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

Diversification Opportunities for Boston Properties and Pinterest

0.45

Correlation Coefficient

Boston Properties  Pinterest

Very weak diversification

The 3 months correlation between Boston and Pinterest is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Boston Properties i.e., Boston Properties and Pinterest go up and down completely randomly.

Pair Corralation between Boston Properties and Pinterest

Considering the 90-day investment horizon Boston Properties is expected to under-perform the Pinterest. But the stock apears to be less risky and, when comparing its historical volatility, Boston Properties is 1.02 times less risky than Pinterest. The stock trades about -0.13 of its potential returns per unit of risk. The Pinterest is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,923  in Pinterest on September 21, 2024 and sell it today you would earn a total of  26.00  from holding Pinterest or generate 0.89% return on investment over 90 days.

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

Boston Properties  vs.  Pinterest

Boston Properties

Risk-Adjusted Performance

0 of 100

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.

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Boston Properties and Pinterest

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

The idea behind Boston Properties and Pinterest 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.