Correlation Between Small Pany and Boston Trust

Can any of the company-specific risk be diversified away by investing in both Small Pany 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 Small Pany and Boston Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Small Pany Fund and Boston Trust Small, you can compare the effects of market volatilities on Small Pany 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 Small Pany with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Pany and Boston Trust.

Diversification Opportunities for Small Pany and Boston Trust

0.88

Correlation Coefficient

Small Pany  Boston Trust

Very poor diversification

The 3 months correlation between Small and Boston is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Fund 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 Small Pany 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 Small Pany 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 Small has no effect on the direction of Small Pany i.e., Small Pany and Boston Trust go up and down completely randomly.

Pair Corralation between Small Pany and Boston Trust

Assuming the 90 days horizon Small Pany is expected to generate 24.21 times less return on investment than Boston Trust. In addition to that, Small Pany is 1.29 times more volatile than Boston Trust Small. It trades about 0.0 of its total potential returns per unit of risk. Boston Trust Small is currently generating about 0.16 per unit of volatility. If you would invest  1,840  in Boston Trust Small on September 13, 2024 and sell it today you would earn a total of  206.00  from holding Boston Trust Small or generate 11.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Small Pany Fund  vs.  Boston Trust Small

Small Pany Fund

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Small Pany Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Small Pany is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Boston Trust Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Trust Small are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Boston Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Small Pany and Boston Trust

The main advantage of trading using opposite Small Pany and Boston Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Pany 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 Small Pany Fund 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..