Correlation Between International Equity and Boston Partners
Can any of the company-specific risk be diversified away by investing in both International Equity 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 International Equity and Boston Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Equity Portfolio and Boston Partners Small, you can compare the effects of market volatilities on International Equity 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 International Equity with a short position of Boston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and Boston Partners.
Diversification Opportunities for International Equity and Boston Partners
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Boston is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Portfolio 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 International Equity 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 International Equity Portfolio 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 International Equity i.e., International Equity and Boston Partners go up and down completely randomly.
Pair Corralation between International Equity and Boston Partners
Assuming the 90 days horizon International Equity Portfolio is expected to under-perform the Boston Partners. But the mutual fund apears to be less risky and, when comparing its historical volatility, International Equity Portfolio is 1.77 times less risky than Boston Partners. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Boston Partners Small is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,665 in Boston Partners Small on September 1, 2024 and sell it today you would earn a total of 293.00 from holding Boston Partners Small or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
International Equity Portfolio vs. Boston Partners Small
Performance |
| Timeline |
| International Equity |
| Boston Partners Small |
International Equity and Boston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Equity and Boston Partners
The main advantage of trading using opposite International Equity and Boston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity 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.| International Equity vs. T Rowe Price | International Equity vs. Causeway International Value | International Equity vs. Short Term Fund Administrative | International Equity vs. Miller Opportunity Trust |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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