Correlation Between Boston Properties and PFIZER

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

By analyzing existing cross correlation between Boston Properties and PFIZER INC 4125, you can compare the effects of market volatilities on Boston Properties and PFIZER 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 PFIZER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Properties and PFIZER.

Diversification Opportunities for Boston Properties and PFIZER

-0.29

Correlation Coefficient

Boston Properties  PFIZER

Very good diversification

The 3 months correlation between Boston and PFIZER is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and PFIZER INC 4125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 4125 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 PFIZER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFIZER INC 4125 has no effect on the direction of Boston Properties i.e., Boston Properties and PFIZER go up and down completely randomly.

Pair Corralation between Boston Properties and PFIZER

Considering the 90-day investment horizon Boston Properties is expected to under-perform the PFIZER. But the stock apears to be less risky and, when comparing its historical volatility, Boston Properties is 1.72 times less risky than PFIZER. The stock trades about -0.19 of its potential returns per unit of risk. The PFIZER INC 4125 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  8,306  in PFIZER INC 4125 on September 27, 2024 and sell it today you would earn a total of  969.00  from holding PFIZER INC 4125 or generate 11.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Boston Properties  vs.  PFIZER INC 4125

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

PFIZER INC 4125

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PFIZER INC 4125 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PFIZER may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Boston Properties and PFIZER

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

The idea behind Boston Properties and PFIZER INC 4125 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.