Correlation Between Agree Realty and Boston Properties

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

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

Diversification Opportunities for Agree Realty and Boston Properties

-0.27

Correlation Coefficient

Agree Realty  Boston Properties

Very good diversification

The 3 months correlation between Agree and Boston is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Agree Realty 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 Agree Realty 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 Agree Realty i.e., Agree Realty and Boston Properties go up and down completely randomly.

Pair Corralation between Agree Realty and Boston Properties

Considering the 90-day investment horizon Agree Realty is expected to generate 1.26 times less return on investment than Boston Properties. But when comparing it to its historical volatility, Agree Realty is 1.36 times less risky than Boston Properties. It trades about 0.13 of its potential returns per unit of risk. Boston Properties is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6,159  in Boston Properties on February 8, 2025 and sell it today you would earn a total of  262.00  from holding Boston Properties or generate 4.25% return on investment over 90 days.

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

Agree Realty  vs.  Boston Properties

Agree Realty

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agree Realty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Agree Realty is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Agree Realty and Boston Properties

The main advantage of trading using opposite Agree Realty and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agree Realty 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 Agree Realty 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.