Correlation Between Boston Trust and Blackrock Total

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

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

Diversification Opportunities for Boston Trust and Blackrock Total

0.96

Correlation Coefficient

Boston Trust  Blackrock Total

Almost no diversification

The 3 months correlation between Boston and Blackrock is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Boston Trust Small and Blackrock Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Total Stock and Boston Trust 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 Trust Small are associated (or correlated) with Blackrock Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Total Stock has no effect on the direction of Boston Trust i.e., Boston Trust and Blackrock Total go up and down completely randomly.

Pair Corralation between Boston Trust and Blackrock Total

Assuming the 90 days horizon Boston Trust Small is expected to generate 0.94 times more return on investment than Blackrock Total. However, Boston Trust Small is 1.07 times less risky than Blackrock Total. It trades about -0.09 of its potential returns per unit of risk. Blackrock Total Stock is currently generating about -0.08 per unit of risk. If you would invest  1,798  in Boston Trust Small on December 30, 2024 and sell it today you would lose (99.00) from holding Boston Trust Small or give up 5.51% of portfolio value over 90 days.

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

Boston Trust Small  vs.  Blackrock Total Stock

Boston Trust Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Trust Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Boston Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Total Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Total Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Blackrock Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boston Trust and Blackrock Total

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

The idea behind Boston Trust Small and Blackrock Total Stock 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..