Correlation Between Arrow Managed and Boston Trust
Can any of the company-specific risk be diversified away by investing in both Arrow Managed 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 Arrow Managed and Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Managed Futures and Boston Trust Smid, you can compare the effects of market volatilities on Arrow Managed 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 Arrow Managed with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Boston Trust.
Diversification Opportunities for Arrow Managed and Boston Trust
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arrow and Boston is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Boston Trust Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Smid and Arrow Managed 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 Arrow Managed Futures 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 Smid has no effect on the direction of Arrow Managed i.e., Arrow Managed and Boston Trust go up and down completely randomly.
Pair Corralation between Arrow Managed and Boston Trust
Assuming the 90 days horizon Arrow Managed is expected to generate 9.45 times less return on investment than Boston Trust. In addition to that, Arrow Managed is 1.5 times more volatile than Boston Trust Smid. It trades about 0.01 of its total potential returns per unit of risk. Boston Trust Smid is currently generating about 0.14 per unit of volatility. If you would invest 2,329 in Boston Trust Smid on September 13, 2024 and sell it today you would earn a total of 370.00 from holding Boston Trust Smid or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Managed Futures vs. Boston Trust Smid
Performance |
| Timeline |
| Arrow Managed Futures |
| Boston Trust Smid |
Arrow Managed and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Boston Trust
The main advantage of trading using opposite Arrow Managed and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed 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.| Arrow Managed vs. 1919 Financial Services | Arrow Managed vs. Davis Financial Fund | Arrow Managed vs. Vanguard Financials Index | Arrow Managed vs. Prudential Jennison Financial |
| Boston Trust vs. Delaware Limited Term Diversified | Boston Trust vs. Pioneer Diversified High | Boston Trust vs. Huber Capital Diversified | Boston Trust vs. Fidelity Advisor Diversified |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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