Correlation Between Boston Partners and Redwood Managed
Can any of the company-specific risk be diversified away by investing in both Boston Partners and Redwood Managed 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 Redwood Managed 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 Redwood Managed Municipal, you can compare the effects of market volatilities on Boston Partners and Redwood Managed 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 Redwood Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and Redwood Managed.
Diversification Opportunities for Boston Partners and Redwood Managed
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boston and Redwood is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Small and Redwood Managed Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Managed Municipal 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 Redwood Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Managed Municipal has no effect on the direction of Boston Partners i.e., Boston Partners and Redwood Managed go up and down completely randomly.
Pair Corralation between Boston Partners and Redwood Managed
Assuming the 90 days horizon Boston Partners Small is expected to generate 13.78 times more return on investment than Redwood Managed. However, Boston Partners is 13.78 times more volatile than Redwood Managed Municipal. It trades about 0.06 of its potential returns per unit of risk. Redwood Managed Municipal is currently generating about 0.12 per unit of risk. If you would invest 2,892 in Boston Partners Small on September 13, 2024 and sell it today you would earn a total of 26.00 from holding Boston Partners Small or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Partners Small vs. Redwood Managed Municipal
Performance |
| Timeline |
| Boston Partners Small |
| Redwood Managed Municipal |
Boston Partners and Redwood Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Partners and Redwood Managed
The main advantage of trading using opposite Boston Partners and Redwood Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners position performs unexpectedly, Redwood Managed 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 Redwood Managed will offset losses from the drop in Redwood Managed's long position.| Boston Partners vs. Aggressive Investors 1 | Boston Partners vs. Buffalo Small Cap | Boston Partners vs. Putnam Small Cap | Boston Partners vs. Dreyfus Strategic Value |
| Redwood Managed vs. Redwood Managed Volatility | Redwood Managed vs. Redwood Managed Volatility | Redwood Managed vs. Redwood Managed Volatility | Redwood Managed vs. Redwood Alphafactor Tactical |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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