Correlation Between Otter Creek and Boston Partners
Can any of the company-specific risk be diversified away by investing in both Otter Creek 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 Otter Creek and Boston Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otter Creek Longshort and Boston Partners Longshort, you can compare the effects of market volatilities on Otter Creek 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 Otter Creek with a short position of Boston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otter Creek and Boston Partners.
Diversification Opportunities for Otter Creek and Boston Partners
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Otter and Boston is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Otter Creek Longshort and Boston Partners Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Partners Longshort and Otter Creek 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 Otter Creek Longshort 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 Longshort has no effect on the direction of Otter Creek i.e., Otter Creek and Boston Partners go up and down completely randomly.
Pair Corralation between Otter Creek and Boston Partners
Assuming the 90 days horizon Otter Creek Longshort is expected to generate 1.66 times more return on investment than Boston Partners. However, Otter Creek is 1.66 times more volatile than Boston Partners Longshort. It trades about 0.11 of its potential returns per unit of risk. Boston Partners Longshort is currently generating about 0.14 per unit of risk. If you would invest 1,271 in Otter Creek Longshort on August 29, 2024 and sell it today you would earn a total of 234.00 from holding Otter Creek Longshort or generate 18.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otter Creek Longshort vs. Boston Partners Longshort
Performance |
| Timeline |
| Otter Creek Longshort |
| Boston Partners Longshort |
Otter Creek and Boston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otter Creek and Boston Partners
The main advantage of trading using opposite Otter Creek and Boston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otter Creek 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.| Otter Creek vs. Boston Partners Global | Otter Creek vs. Asg Managed Futures | Otter Creek vs. Pimco Trends Managed | Otter Creek vs. Aqr Long Short Equity |
| Boston Partners vs. Marketfield Fund Marketfield | Boston Partners vs. Boston Partners Longshort | Boston Partners vs. Boston Partners Longshort | Boston Partners vs. Boston Partners Global |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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