Correlation Between American Funds and Boston Partners
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Boston Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Boston Partners All Cap, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Boston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Boston Partners.
Diversification Opportunities for American Funds and Boston Partners
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Boston is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Boston Partners All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Partners All and American Funds 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 American Funds American 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 All has no effect on the direction of American Funds i.e., American Funds and Boston Partners go up and down completely randomly.
Pair Corralation between American Funds and Boston Partners
Assuming the 90 days horizon American Funds is expected to generate 1.06 times less return on investment than Boston Partners. But when comparing it to its historical volatility, American Funds American is 1.69 times less risky than Boston Partners. It trades about 0.09 of its potential returns per unit of risk. Boston Partners All Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,724 in Boston Partners All Cap on August 29, 2024 and sell it today you would earn a total of 808.00 from holding Boston Partners All Cap or generate 29.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Boston Partners All Cap
Performance |
| Timeline |
| American Funds American |
| Boston Partners All |
American Funds and Boston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Boston Partners
The main advantage of trading using opposite American Funds and Boston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Short Intermediate Bond Fund | American Funds vs. Quantitative Longshort Equity | American Funds vs. Touchstone Ultra Short | American Funds vs. Maryland Short Term Tax Free |
| Boston Partners vs. Large Cap E | Boston Partners vs. Parnassus Endeavor Fund | Boston Partners vs. Hennessy Nerstone Mid | Boston Partners vs. Parnassus Mid 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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