Correlation Between Mid Atlantic and Boston Properties

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

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

Diversification Opportunities for Mid Atlantic and Boston Properties

0.0

Correlation Coefficient

Mid Atlantic  Boston Properties

Pay attention - limited upside

The 3 months correlation between Mid and Boston is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mid Atlantic Home Health and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Mid Atlantic 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 Mid Atlantic Home Health 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 Mid Atlantic i.e., Mid Atlantic and Boston Properties go up and down completely randomly.

Pair Corralation between Mid Atlantic and Boston Properties

Given the investment horizon of 90 days Mid Atlantic Home Health is expected to under-perform the Boston Properties. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mid Atlantic Home Health is 1.05 times less risky than Boston Properties. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Boston Properties is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,375  in Boston Properties on October 21, 2024 and sell it today you would earn a total of  944.00  from holding Boston Properties or generate 14.81% return on investment over 90 days.

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

Mid Atlantic Home Health  vs.  Boston Properties

Mid Atlantic Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Atlantic Home Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Mid Atlantic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 Mid Atlantic and Boston Properties

The main advantage of trading using opposite Mid Atlantic and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Atlantic 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 Mid Atlantic Home Health 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.