Correlation Between Boston Trust and Boston Trust

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

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

Diversification Opportunities for Boston Trust and Boston Trust

0.95

Correlation Coefficient

Boston Trust  Boston Trust

Almost no diversification

The 3 months correlation between Boston and Boston is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Boston Trust Asset and Boston Trust Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Small 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 Asset are associated (or correlated) with Boston Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Trust Small has no effect on the direction of Boston Trust i.e., Boston Trust and Boston Trust go up and down completely randomly.

Pair Corralation between Boston Trust and Boston Trust

Assuming the 90 days horizon Boston Trust Asset is expected to generate 0.69 times more return on investment than Boston Trust. However, Boston Trust Asset is 1.44 times less risky than Boston Trust. It trades about -0.11 of its potential returns per unit of risk. Boston Trust Small is currently generating about -0.2 per unit of risk. If you would invest  6,642  in Boston Trust Asset on December 2, 2024 and sell it today you would lose (350.00) from holding Boston Trust Asset or give up 5.27% 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 Asset  vs.  Boston Trust Small

Boston Trust Asset

Risk-Adjusted Performance

Very Weak

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

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Boston Trust and Boston Trust

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

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