Correlation Between Boston Partners and Paradigm Select

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

Diversification Opportunities for Boston Partners and Paradigm Select

0.3

Correlation Coefficient

Boston Partners  Paradigm Select

Weak diversification

The 3 months correlation between Boston and Paradigm is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners All Cap and Paradigm Select Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm Select 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 Paradigm Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm Select has no effect on the direction of Boston Partners i.e., Boston Partners and Paradigm Select go up and down completely randomly.

Pair Corralation between Boston Partners and Paradigm Select

Assuming the 90 days horizon Boston Partners All Cap is expected to under-perform the Paradigm Select. In addition to that, Boston Partners is 1.91 times more volatile than Paradigm Select Fund. It trades about -0.34 of its total potential returns per unit of risk. Paradigm Select Fund is currently generating about -0.22 per unit of volatility. If you would invest  8,553  in Paradigm Select Fund on September 24, 2024 and sell it today you would lose (428.00) from holding Paradigm Select Fund or give up 5.0% of portfolio value over 90 days.

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

Boston Partners All Cap  vs.  Paradigm Select Fund

Boston Partners All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Partners All Cap 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.

Paradigm Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paradigm Select Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Paradigm Select 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 Paradigm Select

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

The idea behind Boston Partners All Cap and Paradigm Select 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.