Correlation Between Boston Properties and Alexanders

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

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

Diversification Opportunities for Boston Properties and Alexanders

-0.38

Correlation Coefficient

Boston Properties  Alexanders

Very good diversification

The 3 months correlation between Boston and Alexanders is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Alexanders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexanders 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 Alexanders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexanders has no effect on the direction of Boston Properties i.e., Boston Properties and Alexanders go up and down completely randomly.

Pair Corralation between Boston Properties and Alexanders

Considering the 90-day investment horizon Boston Properties is expected to under-perform the Alexanders. In addition to that, Boston Properties is 1.5 times more volatile than Alexanders. It trades about -0.06 of its total potential returns per unit of risk. Alexanders is currently generating about 0.06 per unit of volatility. If you would invest  19,059  in Alexanders on January 25, 2025 and sell it today you would earn a total of  1,119  from holding Alexanders or generate 5.87% return on investment over 90 days.

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

Boston Properties  vs.  Alexanders

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. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Alexanders

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alexanders are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Alexanders may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Boston Properties and Alexanders

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

The idea behind Boston Properties and Alexanders 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.