Correlation Between Ab Concentrated and Boston Trust
Can any of the company-specific risk be diversified away by investing in both Ab Concentrated 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 Ab Concentrated and Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Centrated Growth and Boston Trust Midcap, you can compare the effects of market volatilities on Ab Concentrated 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 Ab Concentrated with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Concentrated and Boston Trust.
Diversification Opportunities for Ab Concentrated and Boston Trust
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WPSIX and Boston is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ab Centrated Growth 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 Ab Concentrated 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 Ab Centrated Growth 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 Ab Concentrated i.e., Ab Concentrated and Boston Trust go up and down completely randomly.
Pair Corralation between Ab Concentrated and Boston Trust
Assuming the 90 days horizon Ab Concentrated is expected to generate 2.2 times less return on investment than Boston Trust. In addition to that, Ab Concentrated is 1.27 times more volatile than Boston Trust Midcap. It trades about 0.12 of its total potential returns per unit of risk. Boston Trust Midcap is currently generating about 0.33 per unit of volatility. If you would invest 2,543 in Boston Trust Midcap on August 30, 2024 and sell it today you would earn a total of 153.00 from holding Boston Trust Midcap or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ab Centrated Growth vs. Boston Trust Midcap
Performance |
| Timeline |
| Ab Centrated Growth |
| Boston Trust Midcap |
Ab Concentrated and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Concentrated and Boston Trust
The main advantage of trading using opposite Ab Concentrated and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Concentrated 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 Ab Centrated Growth and Boston Trust Midcap 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. Boston Trust Asset | Boston Trust vs. Boston Trust Small | Boston Trust vs. Ab E Opportunities |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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