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 Equity and Boston Trust Midcap, 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

0.98

Correlation Coefficient

Boston Trust  Boston Trust

Almost no diversification

The 3 months correlation between Boston and Boston is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Boston Trust Equity and Boston Trust Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Midcap 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 Equity 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 Midcap 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 Equity is expected to generate 0.86 times more return on investment than Boston Trust. However, Boston Trust Equity is 1.16 times less risky than Boston Trust. It trades about 0.1 of its potential returns per unit of risk. Boston Trust Midcap is currently generating about 0.06 per unit of risk. If you would invest  3,411  in Boston Trust Equity on September 13, 2024 and sell it today you would earn a total of  1,322  from holding Boston Trust Equity or generate 38.76% return on investment over 90 days.

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

Boston Trust Equity  vs.  Boston Trust Midcap

Boston Trust Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Trust Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. 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 Midcap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Trust Midcap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. 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.

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 Equity and Boston Trust Midcap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.