Correlation Between Boston Trust and Mairs Power
Can any of the company-specific risk be diversified away by investing in both Boston Trust and Mairs Power 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 Mairs Power 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 Mairs Power Balanced, you can compare the effects of market volatilities on Boston Trust and Mairs Power 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 Mairs Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Trust and Mairs Power.
Diversification Opportunities for Boston Trust and Mairs Power
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and Mairs is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Boston Trust Asset and Mairs Power Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mairs Power Balanced 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 Mairs Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mairs Power Balanced has no effect on the direction of Boston Trust i.e., Boston Trust and Mairs Power go up and down completely randomly.
Pair Corralation between Boston Trust and Mairs Power
Assuming the 90 days horizon Boston Trust is expected to generate 1.06 times less return on investment than Mairs Power. In addition to that, Boston Trust is 1.03 times more volatile than Mairs Power Balanced. It trades about 0.11 of its total potential returns per unit of risk. Mairs Power Balanced is currently generating about 0.11 per unit of volatility. If you would invest 9,307 in Mairs Power Balanced on September 2, 2024 and sell it today you would earn a total of 2,134 from holding Mairs Power Balanced or generate 22.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Trust Asset vs. Mairs Power Balanced
Performance |
| Timeline |
| Boston Trust Asset |
| Mairs Power Balanced |
Boston Trust and Mairs Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Trust and Mairs Power
The main advantage of trading using opposite Boston Trust and Mairs Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Trust position performs unexpectedly, Mairs Power 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 Mairs Power will offset losses from the drop in Mairs Power's long position.| Boston Trust vs. Walden Asset Management | Boston Trust vs. Boston Trust Midcap | Boston Trust vs. Boston Trust Equity | Boston Trust vs. Boston Trust Small |
| Mairs Power vs. Mairs Power Growth | Mairs Power vs. Mairs Power Small | Mairs Power vs. Berwyn Income Fund | Mairs Power vs. Fpa Crescent Fund |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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