Correlation Between Small Company and Boston Partners
Can any of the company-specific risk be diversified away by investing in both Small Company and Boston Partners 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 Small Company and Boston Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Value and Boston Partners Small, you can compare the effects of market volatilities on Small Company and Boston Partners 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 Small Company with a short position of Boston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Boston Partners.
Diversification Opportunities for Small Company and Boston Partners
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Small and Boston is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Value and Boston Partners Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Partners Small and Small Company 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 Small Pany Value are associated (or correlated) with Boston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Partners Small has no effect on the direction of Small Company i.e., Small Company and Boston Partners go up and down completely randomly.
Pair Corralation between Small Company and Boston Partners
Assuming the 90 days horizon Small Pany Value is expected to generate 1.11 times more return on investment than Boston Partners. However, Small Company is 1.11 times more volatile than Boston Partners Small. It trades about 0.1 of its potential returns per unit of risk. Boston Partners Small is currently generating about 0.11 per unit of risk. If you would invest 2,539 in Small Pany Value on September 2, 2024 and sell it today you would earn a total of 460.00 from holding Small Pany Value or generate 18.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Value vs. Boston Partners Small
Performance |
| Timeline |
| Small Pany Value |
| Boston Partners Small |
Small Company and Boston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Boston Partners
The main advantage of trading using opposite Small Company and Boston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company position performs unexpectedly, Boston Partners 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 Boston Partners will offset losses from the drop in Boston Partners' long position.| Small Company vs. Small Pany Growth | Small Company vs. Large Pany Value | Small Company vs. Wilshire Large | Small Company vs. Small Pany Value |
| Boston Partners vs. Aggressive Investors 1 | Boston Partners vs. Buffalo Small Cap | Boston Partners vs. Rice Hall James | Boston Partners vs. Putnam Small Cap |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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