Correlation Between Boston Partners and Otter Creek
Can any of the company-specific risk be diversified away by investing in both Boston Partners and Otter Creek 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 Boston Partners and Otter Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Partners Longshort and Otter Creek Longshort, you can compare the effects of market volatilities on Boston Partners and Otter Creek 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 Boston Partners with a short position of Otter Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and Otter Creek.
Diversification Opportunities for Boston Partners and Otter Creek
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Otter is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Longshort and Otter Creek Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otter Creek Longshort and Boston Partners 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 Boston Partners Longshort are associated (or correlated) with Otter Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otter Creek Longshort has no effect on the direction of Boston Partners i.e., Boston Partners and Otter Creek go up and down completely randomly.
Pair Corralation between Boston Partners and Otter Creek
Assuming the 90 days horizon Boston Partners is expected to generate 1.29 times less return on investment than Otter Creek. But when comparing it to its historical volatility, Boston Partners Longshort is 1.66 times less risky than Otter Creek. It trades about 0.14 of its potential returns per unit of risk. Otter Creek Longshort is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,271 in Otter Creek Longshort on August 29, 2024 and sell it today you would earn a total of 234.00 from holding Otter Creek Longshort or generate 18.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Partners Longshort vs. Otter Creek Longshort
Performance |
| Timeline |
| Boston Partners Longshort |
| Otter Creek Longshort |
Boston Partners and Otter Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Partners and Otter Creek
The main advantage of trading using opposite Boston Partners and Otter Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners position performs unexpectedly, Otter Creek 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 Otter Creek will offset losses from the drop in Otter Creek's long position.| Boston Partners vs. Marketfield Fund Marketfield | Boston Partners vs. Boston Partners Longshort | Boston Partners vs. Boston Partners Longshort | Boston Partners vs. Boston Partners Global |
| Otter Creek vs. Boston Partners Global | Otter Creek vs. Asg Managed Futures | Otter Creek vs. Pimco Trends Managed | Otter Creek vs. Aqr Long Short Equity |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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