Correlation Between Boston Partners and Vanguard Growth

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

Diversification Opportunities for Boston Partners and Vanguard Growth

0.82

Correlation Coefficient

Boston Partners  Vanguard Growth

Very poor diversification

The 3 months correlation between Boston and Vanguard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Small and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index 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 Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Boston Partners i.e., Boston Partners and Vanguard Growth go up and down completely randomly.

Pair Corralation between Boston Partners and Vanguard Growth

Assuming the 90 days horizon Boston Partners Small is expected to generate 0.73 times more return on investment than Vanguard Growth. However, Boston Partners Small is 1.37 times less risky than Vanguard Growth. It trades about -0.08 of its potential returns per unit of risk. Vanguard Growth Index is currently generating about -0.12 per unit of risk. If you would invest  2,415  in Boston Partners Small on December 30, 2024 and sell it today you would lose (134.00) from holding Boston Partners Small or give up 5.55% of portfolio value over 90 days.

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

Boston Partners Small  vs.  Vanguard Growth Index

Boston Partners Small

Risk-Adjusted Performance

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 fairly strong fundamental indicators, Boston Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Growth Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Growth Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Vanguard Growth

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

The idea behind Boston Partners Small and Vanguard Growth Index 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.