Correlation Between Baron Durable and Baron Discovery
Can any of the company-specific risk be diversified away by investing in both Baron Durable and Baron Discovery 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 Durable and Baron Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Durable Advantage and Baron Discovery Fund, you can compare the effects of market volatilities on Baron Durable and Baron Discovery 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 Durable with a short position of Baron Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Durable and Baron Discovery.
Diversification Opportunities for Baron Durable and Baron Discovery
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Baron is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Baron Durable Advantage and Baron Discovery Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Discovery and Baron Durable 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 Durable Advantage are associated (or correlated) with Baron Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Discovery has no effect on the direction of Baron Durable i.e., Baron Durable and Baron Discovery go up and down completely randomly.
Pair Corralation between Baron Durable and Baron Discovery
Assuming the 90 days horizon Baron Durable is expected to generate 1.07 times less return on investment than Baron Discovery. But when comparing it to its historical volatility, Baron Durable Advantage is 1.62 times less risky than Baron Discovery. It trades about 0.36 of its potential returns per unit of risk. Baron Discovery Fund is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,140 in Baron Discovery Fund on September 18, 2024 and sell it today you would earn a total of 164.00 from holding Baron Discovery Fund or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Durable Advantage vs. Baron Discovery Fund
Performance |
| Timeline |
| Baron Durable Advantage |
| Baron Discovery |
Baron Durable and Baron Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Durable and Baron Discovery
The main advantage of trading using opposite Baron Durable and Baron Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Durable position performs unexpectedly, Baron Discovery 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 Discovery will offset losses from the drop in Baron Discovery's long position.| Baron Durable vs. Baron Partners | Baron Durable vs. Baron Focused Growth | Baron Durable vs. Baron Partners Fund | Baron Durable vs. Aquagold International |
| Baron Discovery vs. Baron Growth Fund | Baron Discovery vs. Baron Asset Fund | Baron Discovery vs. Baron Partners Fund | Baron Discovery vs. Nasdaq 100 Fund Investor |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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