Correlation Between Boston Partners and Europacific Growth

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

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

Diversification Opportunities for Boston Partners and Europacific Growth

0.58

Correlation Coefficient

Boston Partners  Europacific Growth

Very weak diversification

The 3 months correlation between Boston and Europacific is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Small and Europacific Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europacific Growth 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 Small are associated (or correlated) with Europacific Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europacific Growth has no effect on the direction of Boston Partners i.e., Boston Partners and Europacific Growth go up and down completely randomly.

Pair Corralation between Boston Partners and Europacific Growth

Assuming the 90 days horizon Boston Partners is expected to generate 3.45 times less return on investment than Europacific Growth. In addition to that, Boston Partners is 1.62 times more volatile than Europacific Growth Fund. It trades about 0.0 of its total potential returns per unit of risk. Europacific Growth Fund is currently generating about 0.02 per unit of volatility. If you would invest  5,137  in Europacific Growth Fund on October 7, 2024 and sell it today you would earn a total of  250.00  from holding Europacific Growth Fund or generate 4.87% return on investment over 90 days.

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

Boston Partners Small  vs.  Europacific Growth Fund

Boston Partners Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Partners Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Europacific Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europacific Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Boston Partners and Europacific Growth

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

The idea behind Boston Partners Small and Europacific Growth Fund 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.