Correlation Between Baron Capital and NRG Energy
Can any of the company-specific risk be diversified away by investing in both Baron Capital and NRG Energy 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 Baron Capital and NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Capital and NRG Energy, you can compare the effects of market volatilities on Baron Capital and NRG Energy 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 Baron Capital with a short position of NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Capital and NRG Energy.
Diversification Opportunities for Baron Capital and NRG Energy
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baron and NRG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Baron Capital and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy and Baron Capital 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 Baron Capital are associated (or correlated) with NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Baron Capital i.e., Baron Capital and NRG Energy go up and down completely randomly.
Pair Corralation between Baron Capital and NRG Energy
Given the investment horizon of 90 days Baron Capital is expected to generate 104.77 times more return on investment than NRG Energy. However, Baron Capital is 104.77 times more volatile than NRG Energy. It trades about 0.19 of its potential returns per unit of risk. NRG Energy is currently generating about 0.12 per unit of risk. If you would invest 0.01 in Baron Capital on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Baron Capital or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Capital vs. NRG Energy
Performance |
| Timeline |
| Baron Capital |
| NRG Energy |
Baron Capital and NRG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Capital and NRG Energy
The main advantage of trading using opposite Baron Capital and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Capital position performs unexpectedly, NRG Energy 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 NRG Energy will offset losses from the drop in NRG Energy's long position.| Baron Capital vs. NRG Energy | Baron Capital vs. Kinetik Holdings | Baron Capital vs. Keurig Dr Pepper | Baron Capital vs. Willamette Valley Vineyards |
| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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