Correlation Between Boston Partners and Wpg Partners

Can any of the company-specific risk be diversified away by investing in both Boston Partners and Wpg 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 Boston Partners and Wpg Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boston Partners All Cap and Wpg Partners Smallmicro, you can compare the effects of market volatilities on Boston Partners and Wpg 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 Boston Partners with a short position of Wpg Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and Wpg Partners.

Diversification Opportunities for Boston Partners and Wpg Partners

0.86

Correlation Coefficient

Boston Partners  Wpg Partners

Very poor diversification

The 3 months correlation between Boston and Wpg is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners All Cap and Wpg Partners Smallmicro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wpg Partners Smallmicro and Boston Partners 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 Boston Partners All Cap are associated (or correlated) with Wpg Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wpg Partners Smallmicro has no effect on the direction of Boston Partners i.e., Boston Partners and Wpg Partners go up and down completely randomly.

Pair Corralation between Boston Partners and Wpg Partners

Assuming the 90 days horizon Boston Partners is expected to generate 1.36 times less return on investment than Wpg Partners. But when comparing it to its historical volatility, Boston Partners All Cap is 1.17 times less risky than Wpg Partners. It trades about 0.11 of its potential returns per unit of risk. Wpg Partners Smallmicro is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,050  in Wpg Partners Smallmicro on September 4, 2024 and sell it today you would earn a total of  145.00  from holding Wpg Partners Smallmicro or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Boston Partners All Cap  vs.  Wpg Partners Smallmicro

Boston Partners All

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Partners All Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Boston Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wpg Partners Smallmicro

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wpg Partners Smallmicro are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Wpg Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Boston Partners and Wpg Partners

The main advantage of trading using opposite Boston Partners and Wpg Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners position performs unexpectedly, Wpg 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 Wpg Partners will offset losses from the drop in Wpg Partners' long position.

The idea behind Boston Partners All Cap and Wpg Partners Smallmicro pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.