Correlation Between Small Cap and Baron International
Can any of the company-specific risk be diversified away by investing in both Small Cap and Baron International 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 Small Cap and Baron International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Growth and Baron International Growth, you can compare the effects of market volatilities on Small Cap and Baron International 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 Small Cap with a short position of Baron International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Baron International.
Diversification Opportunities for Small Cap and Baron International
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Small and Baron is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Growth and Baron International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron International and Small Cap 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 Small Cap Growth are associated (or correlated) with Baron International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron International has no effect on the direction of Small Cap i.e., Small Cap and Baron International go up and down completely randomly.
Pair Corralation between Small Cap and Baron International
Assuming the 90 days horizon Small Cap Growth is expected to generate 1.75 times more return on investment than Baron International. However, Small Cap is 1.75 times more volatile than Baron International Growth. It trades about 0.16 of its potential returns per unit of risk. Baron International Growth is currently generating about -0.16 per unit of risk. If you would invest 2,301 in Small Cap Growth on August 30, 2024 and sell it today you would earn a total of 184.00 from holding Small Cap Growth or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Growth vs. Baron International Growth
Performance |
| Timeline |
| Small Cap Growth |
| Baron International |
Small Cap and Baron International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Baron International
The main advantage of trading using opposite Small Cap and Baron International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Baron International 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 International will offset losses from the drop in Baron International's long position.| Small Cap vs. Mid Cap Value | Small Cap vs. Equity Growth Fund | Small Cap vs. Income Growth Fund | Small Cap vs. Diversified Bond Fund |
| Baron International vs. Baron Emerging Markets | Baron International vs. Baron Discovery Fund | Baron International vs. Baron International Growth | Baron International vs. Baron Partners Fund |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Stocks Directory Find actively traded stocks across global markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |