Correlation Between Global Stock and Boston Trust
Can any of the company-specific risk be diversified away by investing in both Global Stock 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 Global Stock and Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Stock Fund and Boston Trust Midcap, you can compare the effects of market volatilities on Global Stock 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 Global Stock with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Stock and Boston Trust.
Diversification Opportunities for Global Stock and Boston Trust
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Boston is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Global Stock Fund and Boston Trust Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Midcap and Global Stock 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 Global Stock Fund 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 Midcap has no effect on the direction of Global Stock i.e., Global Stock and Boston Trust go up and down completely randomly.
Pair Corralation between Global Stock and Boston Trust
Assuming the 90 days horizon Global Stock is expected to generate 6.66 times less return on investment than Boston Trust. In addition to that, Global Stock is 1.48 times more volatile than Boston Trust Midcap. It trades about 0.01 of its total potential returns per unit of risk. Boston Trust Midcap is currently generating about 0.09 per unit of volatility. If you would invest 2,283 in Boston Trust Midcap on September 4, 2024 and sell it today you would earn a total of 401.00 from holding Boston Trust Midcap or generate 17.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Stock Fund vs. Boston Trust Midcap
Performance |
| Timeline |
| Global Stock |
| Boston Trust Midcap |
Global Stock and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Stock and Boston Trust
The main advantage of trading using opposite Global Stock and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Stock 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.| Global Stock vs. Invesco Disciplined Equity | Global Stock vs. T Rowe Price | Global Stock vs. Global Stock Fund | Global Stock vs. Lord Abbett Developing |
| Boston Trust vs. Boston Trust Asset | Boston Trust vs. Virtus Kar Mid Cap | Boston Trust vs. Virtus Kar Mid Cap | Boston Trust vs. Boston Trust Small |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |