Correlation Between Boston Trust and Barings Emerging
Can any of the company-specific risk be diversified away by investing in both Boston Trust and Barings Emerging 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 Trust and Barings Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Trust Small and Barings Emerging Markets, you can compare the effects of market volatilities on Boston Trust and Barings Emerging 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 Trust with a short position of Barings Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Trust and Barings Emerging.
Diversification Opportunities for Boston Trust and Barings Emerging
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Boston and Barings is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Boston Trust Small and Barings Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Emerging Markets and Boston Trust 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 Trust Small are associated (or correlated) with Barings Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Emerging Markets has no effect on the direction of Boston Trust i.e., Boston Trust and Barings Emerging go up and down completely randomly.
Pair Corralation between Boston Trust and Barings Emerging
Assuming the 90 days horizon Boston Trust Small is expected to generate 2.72 times more return on investment than Barings Emerging. However, Boston Trust is 2.72 times more volatile than Barings Emerging Markets. It trades about 0.05 of its potential returns per unit of risk. Barings Emerging Markets is currently generating about 0.08 per unit of risk. If you would invest 1,655 in Boston Trust Small on September 2, 2024 and sell it today you would earn a total of 423.00 from holding Boston Trust Small or generate 25.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Trust Small vs. Barings Emerging Markets
Performance |
| Timeline |
| Boston Trust Small |
| Barings Emerging Markets |
Boston Trust and Barings Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Trust and Barings Emerging
The main advantage of trading using opposite Boston Trust and Barings Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Trust position performs unexpectedly, Barings Emerging 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 Barings Emerging will offset losses from the drop in Barings Emerging's long position.| Boston Trust vs. International Fund International | Boston Trust vs. Boston Trust Asset | Boston Trust vs. Queens Road Small | Boston Trust vs. Boston Trust Midcap |
| Barings Emerging vs. Victory Floating Rate | Barings Emerging vs. Blackrock High Income | Barings Emerging vs. Blk Rk Sg | Barings Emerging vs. Amg Renaissance Large |
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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