Correlation Between Boston Partners and New Economy
Can any of the company-specific risk be diversified away by investing in both Boston Partners and New Economy 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 New Economy 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 New Economy Fund, you can compare the effects of market volatilities on Boston Partners and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and New Economy.
Diversification Opportunities for Boston Partners and New Economy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boston and New is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Small and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Boston Partners i.e., Boston Partners and New Economy go up and down completely randomly.
Pair Corralation between Boston Partners and New Economy
Assuming the 90 days horizon Boston Partners Small is expected to generate 1.65 times more return on investment than New Economy. However, Boston Partners is 1.65 times more volatile than New Economy Fund. It trades about 0.27 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.04 per unit of risk. If you would invest 2,689 in Boston Partners Small on August 30, 2024 and sell it today you would earn a total of 265.00 from holding Boston Partners Small or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Partners Small vs. New Economy Fund
Performance |
| Timeline |
| Boston Partners Small |
| New Economy Fund |
Boston Partners and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Partners and New Economy
The main advantage of trading using opposite Boston Partners and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Boston Partners vs. Vanguard Small Cap Value | Boston Partners vs. Vanguard Small Cap Value | Boston Partners vs. Us Small Cap | Boston Partners vs. Us Targeted Value |
| New Economy vs. Artisan Global Unconstrained | New Economy vs. Scharf Global Opportunity | New Economy vs. Ab Global Risk | New Economy vs. Morgan Stanley Global |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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