Correlation Between Boston Partners and Buffalo Emerging

Can any of the company-specific risk be diversified away by investing in both Boston Partners and Buffalo Emerging 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 Buffalo Emerging 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 Buffalo Emerging Opportunities, you can compare the effects of market volatilities on Boston Partners and Buffalo Emerging 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 Buffalo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and Buffalo Emerging.

Diversification Opportunities for Boston Partners and Buffalo Emerging

0.78

Correlation Coefficient

Boston Partners  Buffalo Emerging

Poor diversification

The 3 months correlation between Boston and Buffalo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Small and Buffalo Emerging Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo Emerging Opp 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 Buffalo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo Emerging Opp has no effect on the direction of Boston Partners i.e., Boston Partners and Buffalo Emerging go up and down completely randomly.

Pair Corralation between Boston Partners and Buffalo Emerging

Assuming the 90 days horizon Boston Partners is expected to generate 6.41 times less return on investment than Buffalo Emerging. In addition to that, Boston Partners is 1.15 times more volatile than Buffalo Emerging Opportunities. It trades about 0.0 of its total potential returns per unit of risk. Buffalo Emerging Opportunities is currently generating about 0.02 per unit of volatility. If you would invest  1,594  in Buffalo Emerging Opportunities on September 30, 2024 and sell it today you would earn a total of  69.00  from holding Buffalo Emerging Opportunities or generate 4.33% return on investment over 90 days.

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

Boston Partners Small  vs.  Buffalo Emerging Opportunities

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.

Buffalo Emerging Opp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buffalo Emerging Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Buffalo Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boston Partners and Buffalo Emerging

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

The idea behind Boston Partners Small and Buffalo Emerging Opportunities 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.