Correlation Between Boston Partners and Large Cap
Can any of the company-specific risk be diversified away by investing in both Boston Partners and Large Cap 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 Large Cap 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 Large Cap Equity, you can compare the effects of market volatilities on Boston Partners and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and Large Cap.
Diversification Opportunities for Boston Partners and Large Cap
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Boston and Large is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Small and Large Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Equity 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Equity has no effect on the direction of Boston Partners i.e., Boston Partners and Large Cap go up and down completely randomly.
Pair Corralation between Boston Partners and Large Cap
Assuming the 90 days horizon Boston Partners is expected to generate 1.84 times less return on investment than Large Cap. In addition to that, Boston Partners is 1.52 times more volatile than Large Cap Equity. It trades about 0.04 of its total potential returns per unit of risk. Large Cap Equity is currently generating about 0.11 per unit of volatility. If you would invest 1,751 in Large Cap Equity on September 14, 2024 and sell it today you would earn a total of 926.00 from holding Large Cap Equity or generate 52.88% 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. Large Cap Equity
Performance |
| Timeline |
| Boston Partners Small |
| Large Cap Equity |
Boston Partners and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Partners and Large Cap
The main advantage of trading using opposite Boston Partners and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap'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 |
| Large Cap vs. Goldman Sachs Small | Large Cap vs. Victory Rs Partners | Large Cap vs. Boston Partners Small | Large Cap vs. John Hancock Ii |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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