Correlation Between Absolute Convertible and Baron Select
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Baron 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 Absolute Convertible and Baron Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Baron Select Funds, you can compare the effects of market volatilities on Absolute Convertible and Baron 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 Absolute Convertible with a short position of Baron Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Baron Select.
Diversification Opportunities for Absolute Convertible and Baron Select
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Absolute and Baron is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Baron Select Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Select Funds and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Baron Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Select Funds has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Baron Select go up and down completely randomly.
Pair Corralation between Absolute Convertible and Baron Select
Assuming the 90 days horizon Absolute Convertible is expected to generate 8.22 times less return on investment than Baron Select. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 22.94 times less risky than Baron Select. It trades about 0.37 of its potential returns per unit of risk. Baron Select Funds is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 543.00 in Baron Select Funds on September 14, 2024 and sell it today you would earn a total of 825.00 from holding Baron Select Funds or generate 151.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Baron Select Funds
Performance |
| Timeline |
| Absolute Convertible |
| Baron Select Funds |
Absolute Convertible and Baron Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Baron Select
The main advantage of trading using opposite Absolute Convertible and Baron Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Baron 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 Baron Select will offset losses from the drop in Baron Select's long position.| Absolute Convertible vs. Allianzgi Convertible Income | Absolute Convertible vs. Lord Abbett Convertible | Absolute Convertible vs. Rationalpier 88 Convertible | Absolute Convertible vs. Virtus Convertible |
| Baron Select vs. Qs Moderate Growth | Baron Select vs. Franklin Lifesmart Retirement | Baron Select vs. Sierra E Retirement | Baron Select vs. Transamerica Cleartrack Retirement |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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