Correlation Between Ab Global and Baron Health
Can any of the company-specific risk be diversified away by investing in both Ab Global and Baron Health 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 Ab Global and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Bond and Baron Health Care, you can compare the effects of market volatilities on Ab Global and Baron Health 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 Ab Global with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Baron Health.
Diversification Opportunities for Ab Global and Baron Health
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ANAZX and Baron is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Bond and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care and Ab Global 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 Ab Global Bond are associated (or correlated) with Baron Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Ab Global i.e., Ab Global and Baron Health go up and down completely randomly.
Pair Corralation between Ab Global and Baron Health
Assuming the 90 days horizon Ab Global is expected to generate 9.83 times less return on investment than Baron Health. But when comparing it to its historical volatility, Ab Global Bond is 3.11 times less risky than Baron Health. It trades about 0.06 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,958 in Baron Health Care on October 25, 2024 and sell it today you would earn a total of 57.00 from holding Baron Health Care or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Global Bond vs. Baron Health Care
Performance |
| Timeline |
| Ab Global Bond |
| Baron Health Care |
Ab Global and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Global and Baron Health
The main advantage of trading using opposite Ab Global and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Baron Health 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 Baron Health will offset losses from the drop in Baron Health's long position.| Ab Global vs. Ashmore Emerging Markets | Ab Global vs. Aqr Sustainable Long Short | Ab Global vs. Sp Midcap Index | Ab Global vs. Saat Market Growth |
| Baron Health vs. Blackrock Financial Institutions | Baron Health vs. John Hancock Financial | Baron Health vs. Financials Ultrasector Profund | Baron Health vs. T Rowe Price |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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