Correlation Between Large Cap and Boston Partners
Can any of the company-specific risk be diversified away by investing in both Large Cap 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 Large Cap and Boston Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap E and Boston Partners All Cap, you can compare the effects of market volatilities on Large Cap 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 Large Cap with a short position of Boston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Boston Partners.
Diversification Opportunities for Large Cap and Boston Partners
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Large and Boston is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap E 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 Large Cap 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 Large Cap E 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 Large Cap i.e., Large Cap and Boston Partners go up and down completely randomly.
Pair Corralation between Large Cap and Boston Partners
Assuming the 90 days horizon Large Cap E is expected to generate 0.97 times more return on investment than Boston Partners. However, Large Cap E is 1.03 times less risky than Boston Partners. It trades about 0.28 of its potential returns per unit of risk. Boston Partners All Cap is currently generating about 0.19 per unit of risk. If you would invest 2,511 in Large Cap E on August 28, 2024 and sell it today you would earn a total of 145.00 from holding Large Cap E or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap E vs. Boston Partners All Cap
Performance |
| Timeline |
| Large Cap E |
| Boston Partners All |
Large Cap and Boston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Boston Partners
The main advantage of trading using opposite Large Cap and Boston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap 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.| Large Cap vs. Msift High Yield | Large Cap vs. Pace High Yield | Large Cap vs. Blackrock High Yield | Large Cap vs. American Century High |
| Boston Partners vs. Large Cap E | Boston Partners vs. Parnassus Endeavor Fund | Boston Partners vs. Hennessy Nerstone Mid | Boston Partners vs. Boston Partners All 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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