Correlation Between Boston Partners and Caldwell Orkin

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

By analyzing existing cross correlation between Boston Partners Longshort and Caldwell Orkin Market, you can compare the effects of market volatilities on Boston Partners and Caldwell Orkin 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 Caldwell Orkin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and Caldwell Orkin.

Diversification Opportunities for Boston Partners and Caldwell Orkin

0.29

Correlation Coefficient

Boston Partners  Caldwell Orkin

Modest diversification

The 3 months correlation between Boston and Caldwell is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Longshort and Caldwell Orkin Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caldwell Orkin Market 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 Longshort are associated (or correlated) with Caldwell Orkin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caldwell Orkin Market has no effect on the direction of Boston Partners i.e., Boston Partners and Caldwell Orkin go up and down completely randomly.

Pair Corralation between Boston Partners and Caldwell Orkin

Assuming the 90 days horizon Boston Partners Longshort is expected to under-perform the Caldwell Orkin. In addition to that, Boston Partners is 6.5 times more volatile than Caldwell Orkin Market. It trades about -0.21 of its total potential returns per unit of risk. Caldwell Orkin Market is currently generating about 0.11 per unit of volatility. If you would invest  5,119  in Caldwell Orkin Market on September 15, 2024 and sell it today you would earn a total of  88.00  from holding Caldwell Orkin Market or generate 1.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Boston Partners Longshort  vs.  Caldwell Orkin Market

Boston Partners Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Partners Longshort has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Caldwell Orkin Market

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caldwell Orkin Market are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Caldwell Orkin showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Partners and Caldwell Orkin

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

The idea behind Boston Partners Longshort and Caldwell Orkin Market 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.