Correlation Between International Fund and Boston Trust
Can any of the company-specific risk be diversified away by investing in both International Fund 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 International Fund and Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Fund International and Boston Trust Small, you can compare the effects of market volatilities on International Fund 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 International Fund with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Fund and Boston Trust.
Diversification Opportunities for International Fund and Boston Trust
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and BOSTON is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding International Fund Internation and Boston Trust Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Small and International Fund 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 International Fund International 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 Small has no effect on the direction of International Fund i.e., International Fund and Boston Trust go up and down completely randomly.
Pair Corralation between International Fund and Boston Trust
Assuming the 90 days horizon International Fund is expected to generate 1.11 times less return on investment than Boston Trust. But when comparing it to its historical volatility, International Fund International is 1.28 times less risky than Boston Trust. It trades about 0.21 of its potential returns per unit of risk. Boston Trust Small is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,791 in Boston Trust Small on November 3, 2024 and sell it today you would earn a total of 58.00 from holding Boston Trust Small or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Fund Internation vs. Boston Trust Small
Performance |
| Timeline |
| International Fund |
| Boston Trust Small |
International Fund and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Fund and Boston Trust
The main advantage of trading using opposite International Fund and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Fund 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.The idea behind International Fund International and Boston Trust Small pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Boston Trust vs. International Fund International | Boston Trust vs. Boston Trust Asset | Boston Trust vs. Queens Road Small | Boston Trust vs. Boston Trust Midcap |
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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