Correlation Between Baron Durable and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Baron Durable and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Baron Durable and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Durable and Dow Jones.
Diversification Opportunities for Baron Durable and Dow Jones
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baron and Dow is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Baron Durable Advantage and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Baron Durable i.e., Baron Durable and Dow Jones go up and down completely randomly.
Pair Corralation between Baron Durable and Dow Jones
Assuming the 90 days horizon Baron Durable Advantage is expected to generate 1.37 times more return on investment than Dow Jones. However, Baron Durable is 1.37 times more volatile than Dow Jones Industrial. It trades about 0.13 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of risk. If you would invest 2,157 in Baron Durable Advantage on August 29, 2024 and sell it today you would earn a total of 727.00 from holding Baron Durable Advantage or generate 33.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Durable Advantage vs. Dow Jones Industrial
Performance |
| Timeline |
Baron Durable and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Baron Durable Advantage
Pair trading matchups for Baron Durable
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Baron Durable and Dow Jones
The main advantage of trading using opposite Baron Durable and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Durable position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Baron Durable vs. Baron Intl Growth | Baron Durable vs. Baron International Growth | Baron Durable vs. Baron Real Estate | Baron Durable vs. Baron Real Estate |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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