Correlation Between Boston Trust and Frontier Mfg
Can any of the company-specific risk be diversified away by investing in both Boston Trust and Frontier Mfg 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 Frontier Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Trust Asset and Frontier Mfg E, you can compare the effects of market volatilities on Boston Trust and Frontier Mfg 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 Frontier Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Trust and Frontier Mfg.
Diversification Opportunities for Boston Trust and Frontier Mfg
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boston and Frontier is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Boston Trust Asset and Frontier Mfg E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Mfg E 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 Asset are associated (or correlated) with Frontier Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Mfg E has no effect on the direction of Boston Trust i.e., Boston Trust and Frontier Mfg go up and down completely randomly.
Pair Corralation between Boston Trust and Frontier Mfg
Assuming the 90 days horizon Boston Trust Asset is expected to generate 0.66 times more return on investment than Frontier Mfg. However, Boston Trust Asset is 1.51 times less risky than Frontier Mfg. It trades about 0.11 of its potential returns per unit of risk. Frontier Mfg E is currently generating about 0.04 per unit of risk. If you would invest 5,510 in Boston Trust Asset on September 1, 2024 and sell it today you would earn a total of 1,217 from holding Boston Trust Asset or generate 22.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Boston Trust Asset vs. Frontier Mfg E
Performance |
| Timeline |
| Boston Trust Asset |
| Frontier Mfg E |
Boston Trust and Frontier Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Trust and Frontier Mfg
The main advantage of trading using opposite Boston Trust and Frontier Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Trust position performs unexpectedly, Frontier Mfg 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 Frontier Mfg will offset losses from the drop in Frontier Mfg's long position.| Boston Trust vs. Walden Asset Management | Boston Trust vs. Boston Trust Midcap | Boston Trust vs. Boston Trust Small | Boston Trust vs. Invesco Disciplined Equity |
| Frontier Mfg vs. Frontier Mfg E | Frontier Mfg vs. Alpine Global Infrastructure | Frontier Mfg vs. Real Estate Fund | Frontier Mfg vs. Dow 2x Strategy |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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