Correlation Between Gap, and Boston Properties

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

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

Diversification Opportunities for Gap, and Boston Properties

-0.34

Correlation Coefficient

Gap,  Boston Properties

Very good diversification

The 3 months correlation between Gap, and Boston is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Gap, 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 The Gap, 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 Gap, i.e., Gap, and Boston Properties go up and down completely randomly.

Pair Corralation between Gap, and Boston Properties

Considering the 90-day investment horizon The Gap, is expected to generate 0.84 times more return on investment than Boston Properties. However, The Gap, is 1.19 times less risky than Boston Properties. It trades about -0.16 of its potential returns per unit of risk. Boston Properties is currently generating about -0.3 per unit of risk. If you would invest  2,534  in The Gap, on October 11, 2024 and sell it today you would lose (153.00) from holding The Gap, or give up 6.04% of portfolio value over 90 days.

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

The Gap,  vs.  Boston Properties

Gap,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Gap, may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 fragile 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.

Pair Trading with Gap, and Boston Properties

The main advantage of trading using opposite Gap, and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, 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 The Gap, 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 Commodity Directory module to find actively traded commodities issued by global exchanges.