Correlation Between Boeing and Boston Trust
Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Boston Trust Equity, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Boston Trust.
Diversification Opportunities for Boeing and Boston Trust
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boeing and Boston is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Boston Trust Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Equity and Boeing 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 The Boeing 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 Equity has no effect on the direction of Boeing i.e., Boeing and Boston Trust go up and down completely randomly.
Pair Corralation between Boeing and Boston Trust
Allowing for the 90-day total investment horizon The Boeing is expected to generate 2.39 times more return on investment than Boston Trust. However, Boeing is 2.39 times more volatile than Boston Trust Equity. It trades about 0.07 of its potential returns per unit of risk. Boston Trust Equity is currently generating about -0.01 per unit of risk. If you would invest 15,988 in The Boeing on October 22, 2024 and sell it today you would earn a total of 1,121 from holding The Boeing or generate 7.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Boston Trust Equity
Performance |
| Timeline |
| Boeing |
| Boston Trust Equity |
Boeing and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Boston Trust
The main advantage of trading using opposite Boeing and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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.| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
| Boston Trust vs. Boston Trust Asset | Boston Trust vs. Boston Trust Small | Boston Trust vs. Walden Asset Management | Boston Trust vs. Diamond Hill Select |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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