Correlation Between COUSINS PTIES and Boston Properties

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

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

Diversification Opportunities for COUSINS PTIES and Boston Properties

0.91

Correlation Coefficient

COUSINS PTIES  Boston Properties

Almost no diversification

The 3 months correlation between COUSINS and Boston is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding COUSINS PTIES INC and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and COUSINS PTIES 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 COUSINS PTIES INC are associated (or correlated) with Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of COUSINS PTIES i.e., COUSINS PTIES and Boston Properties go up and down completely randomly.

Pair Corralation between COUSINS PTIES and Boston Properties

Assuming the 90 days trading horizon COUSINS PTIES INC is expected to generate 0.85 times more return on investment than Boston Properties. However, COUSINS PTIES INC is 1.18 times less risky than Boston Properties. It trades about -0.04 of its potential returns per unit of risk. Boston Properties is currently generating about -0.07 per unit of risk. If you would invest  2,849  in COUSINS PTIES INC on December 29, 2024 and sell it today you would lose (129.00) from holding COUSINS PTIES INC or give up 4.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

COUSINS PTIES INC  vs.  Boston Properties

COUSINS PTIES INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days COUSINS PTIES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COUSINS PTIES is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with COUSINS PTIES and Boston Properties

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

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