Correlation Between Ab Centrated and Boston Trust

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

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

Diversification Opportunities for Ab Centrated and Boston Trust

0.91

Correlation Coefficient

Ab Centrated  Boston Trust

Almost no diversification

The 3 months correlation between WPSIX and Boston is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ab Centrated Growth and Boston Trust Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Asset and Ab Centrated 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 Ab Centrated Growth 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 Asset has no effect on the direction of Ab Centrated i.e., Ab Centrated and Boston Trust go up and down completely randomly.

Pair Corralation between Ab Centrated and Boston Trust

Assuming the 90 days horizon Ab Centrated Growth is expected to under-perform the Boston Trust. In addition to that, Ab Centrated is 1.46 times more volatile than Boston Trust Asset. It trades about -0.28 of its total potential returns per unit of risk. Boston Trust Asset is currently generating about -0.23 per unit of volatility. If you would invest  6,711  in Boston Trust Asset on September 28, 2024 and sell it today you would lose (448.00) from holding Boston Trust Asset or give up 6.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Ab Centrated Growth  vs.  Boston Trust Asset

Ab Centrated Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Centrated Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Boston Trust Asset

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Ab Centrated and Boston Trust

The main advantage of trading using opposite Ab Centrated and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Centrated 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 Ab Centrated Growth and Boston Trust Asset 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.