Correlation Between SUMITOMO P and Boston Properties

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

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

Diversification Opportunities for SUMITOMO P and Boston Properties

0.18

Correlation Coefficient

SUMITOMO P  Boston Properties

Average diversification

The 3 months correlation between SUMITOMO and Boston is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding SUMITOMO P SP and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and SUMITOMO P 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 SUMITOMO P SP 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 SUMITOMO P i.e., SUMITOMO P and Boston Properties go up and down completely randomly.

Pair Corralation between SUMITOMO P and Boston Properties

Assuming the 90 days trading horizon SUMITOMO P is expected to generate 1.21 times less return on investment than Boston Properties. But when comparing it to its historical volatility, SUMITOMO P SP is 1.04 times less risky than Boston Properties. It trades about 0.07 of its potential returns per unit of risk. Boston Properties is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,122  in Boston Properties on September 13, 2024 and sell it today you would earn a total of  508.00  from holding Boston Properties or generate 7.13% return on investment over 90 days.

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

SUMITOMO P SP  vs.  Boston Properties

SUMITOMO P SP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SUMITOMO P SP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, SUMITOMO P is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Boston Properties

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Properties are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Boston Properties may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SUMITOMO P and Boston Properties

The main advantage of trading using opposite SUMITOMO P and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUMITOMO P 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 SUMITOMO P SP 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.