Correlation Between Walden Asset and Boston Trust
Can any of the company-specific risk be diversified away by investing in both Walden Asset 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 Walden Asset and Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walden Asset Management and Boston Trust Smid, you can compare the effects of market volatilities on Walden Asset 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 Walden Asset with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walden Asset and Boston Trust.
Diversification Opportunities for Walden Asset and Boston Trust
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walden and Boston is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Walden Asset Management 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 Walden Asset 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 Walden Asset Management 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 Walden Asset i.e., Walden Asset and Boston Trust go up and down completely randomly.
Pair Corralation between Walden Asset and Boston Trust
Assuming the 90 days horizon Walden Asset is expected to generate 1.96 times less return on investment than Boston Trust. But when comparing it to its historical volatility, Walden Asset Management is 1.54 times less risky than Boston Trust. It trades about 0.05 of its potential returns per unit of risk. Boston Trust Smid is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,024 in Boston Trust Smid on September 12, 2024 and sell it today you would earn a total of 669.00 from holding Boston Trust Smid or generate 33.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walden Asset Management vs. Boston Trust Smid
Performance |
| Timeline |
| Walden Asset Management |
| Boston Trust Smid |
Walden Asset and Boston Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walden Asset and Boston Trust
The main advantage of trading using opposite Walden Asset and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walden Asset 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.| Walden Asset vs. Income Fund Of | Walden Asset vs. Income Fund Of | Walden Asset vs. Income Fund Of | Walden Asset vs. Income Fund Of |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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