Correlation Between Ab Core and Boston Trust
Can any of the company-specific risk be diversified away by investing in both Ab Core 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 Core 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 E Opportunities and Boston Trust Asset, you can compare the effects of market volatilities on Ab Core 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 Core with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Core and Boston Trust.
Diversification Opportunities for Ab Core and Boston Trust
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ADGYX and Boston is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ab E Opportunities 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 Core 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 E Opportunities 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 Core i.e., Ab Core and Boston Trust go up and down completely randomly.
Pair Corralation between Ab Core and Boston Trust
Assuming the 90 days horizon Ab E Opportunities is expected to generate 1.55 times more return on investment than Boston Trust. However, Ab Core is 1.55 times more volatile than Boston Trust Asset. It trades about 0.17 of its potential returns per unit of risk. Boston Trust Asset is currently generating about 0.15 per unit of risk. If you would invest 2,647 in Ab E Opportunities on August 25, 2024 and sell it today you would earn a total of 89.00 from holding Ab E Opportunities or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab E Opportunities vs. Boston Trust Asset
Performance |
| Timeline |
| Ab E Opportunities |
| Boston Trust Asset |
Ab Core and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Core and Boston Trust
The main advantage of trading using opposite Ab Core and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Core 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.| Ab Core vs. Ab E Opportunities | Ab Core vs. Select Fund C | Ab Core vs. Select Fund R | Ab Core vs. Amg Renaissance Large |
| Boston Trust vs. Walden Asset Management | Boston Trust vs. Boston Trust Midcap | Boston Trust vs. Boston Trust Equity | Boston Trust vs. Boston Trust Small |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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