Correlation Between Boston Trust and Boston Common
Can any of the company-specific risk be diversified away by investing in both Boston Trust and Boston Common 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 Boston Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Trust Equity and Boston Mon Equity, you can compare the effects of market volatilities on Boston Trust and Boston Common 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 Boston Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Trust and Boston Common.
Diversification Opportunities for Boston Trust and Boston Common
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Boston and Boston is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Boston Trust Equity and Boston Mon Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Mon Equity 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 Equity are associated (or correlated) with Boston Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Mon Equity has no effect on the direction of Boston Trust i.e., Boston Trust and Boston Common go up and down completely randomly.
Pair Corralation between Boston Trust and Boston Common
Assuming the 90 days horizon Boston Trust is expected to generate 1.24 times less return on investment than Boston Common. But when comparing it to its historical volatility, Boston Trust Equity is 1.21 times less risky than Boston Common. It trades about 0.11 of its potential returns per unit of risk. Boston Mon Equity is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,343 in Boston Mon Equity on September 1, 2024 and sell it today you would earn a total of 1,184 from holding Boston Mon Equity or generate 18.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Trust Equity vs. Boston Mon Equity
Performance |
| Timeline |
| Boston Trust Equity |
| Boston Mon Equity |
Boston Trust and Boston Common Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Trust and Boston Common
The main advantage of trading using opposite Boston Trust and Boston Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Trust position performs unexpectedly, Boston Common 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 Common will offset losses from the drop in Boston Common's long position.| Boston Trust vs. Boston Trust Asset | Boston Trust vs. Boston Trust Small | Boston Trust vs. Walden Asset Management | Boston Trust vs. Diamond Hill Select |
| Boston Common vs. Boston Common Esg | Boston Common vs. Jpmorgan Smartretirement Blend | Boston Common vs. Nuveen Real Asset | Boston Common vs. Transportation Portfolio Transportation |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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