Correlation Between Boston Properties and CONSTELLATION

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

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

Diversification Opportunities for Boston Properties and CONSTELLATION

-0.4

Correlation Coefficient

Boston Properties  CONSTELLATION

Very good diversification

The 3 months correlation between Boston and CONSTELLATION is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and CONSTELLATION ENERGY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION ENERGY 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 CONSTELLATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTELLATION ENERGY has no effect on the direction of Boston Properties i.e., Boston Properties and CONSTELLATION go up and down completely randomly.

Pair Corralation between Boston Properties and CONSTELLATION

Considering the 90-day investment horizon Boston Properties is expected to under-perform the CONSTELLATION. In addition to that, Boston Properties is 1.72 times more volatile than CONSTELLATION ENERGY GROUP. It trades about -0.14 of its total potential returns per unit of risk. CONSTELLATION ENERGY GROUP is currently generating about -0.11 per unit of volatility. If you would invest  11,477  in CONSTELLATION ENERGY GROUP on October 25, 2024 and sell it today you would lose (531.00) from holding CONSTELLATION ENERGY GROUP or give up 4.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	62.71%
Values	Daily Returns

Boston Properties  vs.  CONSTELLATION ENERGY GROUP

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 unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

CONSTELLATION ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION ENERGY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSTELLATION ENERGY GROUP investors.

Pair Trading with Boston Properties and CONSTELLATION

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

The idea behind Boston Properties and CONSTELLATION ENERGY GROUP 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.