Correlation Between Boston Common and Boston Trust
Can any of the company-specific risk be diversified away by investing in both Boston Common 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 Boston Common and Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Mon International and Boston Trust Equity, you can compare the effects of market volatilities on Boston Common 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 Boston Common with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Common and Boston Trust.
Diversification Opportunities for Boston Common and Boston Trust
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boston and Boston is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Boston Mon International 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 Boston Common 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 Mon International 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 Boston Common i.e., Boston Common and Boston Trust go up and down completely randomly.
Pair Corralation between Boston Common and Boston Trust
Assuming the 90 days horizon Boston Common is expected to generate 2.26 times less return on investment than Boston Trust. In addition to that, Boston Common is 1.16 times more volatile than Boston Trust Equity. It trades about 0.03 of its total potential returns per unit of risk. Boston Trust Equity is currently generating about 0.09 per unit of volatility. If you would invest 3,492 in Boston Trust Equity on August 29, 2024 and sell it today you would earn a total of 1,225 from holding Boston Trust Equity or generate 35.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Mon International vs. Boston Trust Equity
Performance |
| Timeline |
| Boston Mon International |
| Boston Trust Equity |
Boston Common and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Common and Boston Trust
The main advantage of trading using opposite Boston Common and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Common 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.| Boston Common vs. Gmo Resources | Boston Common vs. Energy Services Fund | Boston Common vs. Tortoise Energy Independence | Boston Common vs. Oil Gas Ultrasector |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |