Correlation Between Boston Trust and Rbc Smid

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

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

Diversification Opportunities for Boston Trust and Rbc Smid

0.92

Correlation Coefficient

Boston Trust  Rbc Smid

Almost no diversification

The 3 months correlation between Boston and Rbc is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Boston Trust Midcap and Rbc Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Smid Cap 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 Midcap are associated (or correlated) with Rbc Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Smid Cap has no effect on the direction of Boston Trust i.e., Boston Trust and Rbc Smid go up and down completely randomly.

Pair Corralation between Boston Trust and Rbc Smid

Assuming the 90 days horizon Boston Trust Midcap is expected to generate 0.74 times more return on investment than Rbc Smid. However, Boston Trust Midcap is 1.36 times less risky than Rbc Smid. It trades about 0.06 of its potential returns per unit of risk. Rbc Smid Cap is currently generating about 0.03 per unit of risk. If you would invest  2,161  in Boston Trust Midcap on September 2, 2024 and sell it today you would earn a total of  538.00  from holding Boston Trust Midcap or generate 24.9% 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 Midcap  vs.  Rbc Smid Cap

Boston Trust Midcap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Trust Midcap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Boston Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rbc Smid Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Smid Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rbc Smid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Boston Trust and Rbc Smid

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

The idea behind Boston Trust Midcap and Rbc Smid Cap 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.