Correlation Between Mid Cap and Boston Trust
Can any of the company-specific risk be diversified away by investing in both Mid Cap 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 Mid Cap and Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Value and Boston Trust Small, you can compare the effects of market volatilities on Mid Cap 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 Mid Cap with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Boston Trust.
Diversification Opportunities for Mid Cap and Boston Trust
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and Boston is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value 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 Mid Cap 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 Mid Cap Value 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 Mid Cap i.e., Mid Cap and Boston Trust go up and down completely randomly.
Pair Corralation between Mid Cap and Boston Trust
Assuming the 90 days horizon Mid Cap Value is expected to under-perform the Boston Trust. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mid Cap Value is 1.22 times less risky than Boston Trust. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Boston Trust Small is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,894 in Boston Trust Small on October 26, 2024 and sell it today you would lose (38.00) from holding Boston Trust Small or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap Value vs. Boston Trust Small
Performance |
| Timeline |
| Mid Cap Value |
| Boston Trust Small |
Mid Cap and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Boston Trust
The main advantage of trading using opposite Mid Cap and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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.| Mid Cap vs. The Gold Bullion | Mid Cap vs. Invesco Gold Special | Mid Cap vs. Vy Goldman Sachs | Mid Cap vs. Fidelity Advisor Gold |
| Boston Trust vs. International Fund International | Boston Trust vs. Boston Trust Asset | Boston Trust vs. Queens Road Small | Boston Trust vs. Boston Trust Midcap |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |