Correlation Between Boston Partners and Applied Finance
Can any of the company-specific risk be diversified away by investing in both Boston Partners and Applied Finance 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 Applied Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Partners Small and Applied Finance Explorer, you can compare the effects of market volatilities on Boston Partners and Applied Finance 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 Applied Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and Applied Finance.
Diversification Opportunities for Boston Partners and Applied Finance
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Applied is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Small and Applied Finance Explorer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Finance Explorer 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 Small are associated (or correlated) with Applied Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Finance Explorer has no effect on the direction of Boston Partners i.e., Boston Partners and Applied Finance go up and down completely randomly.
Pair Corralation between Boston Partners and Applied Finance
Assuming the 90 days horizon Boston Partners Small is expected to generate 1.1 times more return on investment than Applied Finance. However, Boston Partners is 1.1 times more volatile than Applied Finance Explorer. It trades about 0.21 of its potential returns per unit of risk. Applied Finance Explorer is currently generating about 0.16 per unit of risk. If you would invest 2,686 in Boston Partners Small on August 24, 2024 and sell it today you would earn a total of 197.00 from holding Boston Partners Small or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Partners Small vs. Applied Finance Explorer
Performance |
| Timeline |
| Boston Partners Small |
| Applied Finance Explorer |
Boston Partners and Applied Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Partners and Applied Finance
The main advantage of trading using opposite Boston Partners and Applied Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners position performs unexpectedly, Applied Finance 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 Applied Finance will offset losses from the drop in Applied Finance's long position.| Boston Partners vs. Aggressive Investors 1 | Boston Partners vs. Buffalo Small Cap | Boston Partners vs. Rice Hall James | Boston Partners vs. Putnam Small Cap |
| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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