Correlation Between Baron Durable and Baron Global
Can any of the company-specific risk be diversified away by investing in both Baron Durable and Baron Global 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 Global 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 Global Advantage, you can compare the effects of market volatilities on Baron Durable and Baron Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Durable and Baron Global.
Diversification Opportunities for Baron Durable and Baron Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Baron is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Baron Durable Advantage and Baron Global Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Global Advantage 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Global Advantage has no effect on the direction of Baron Durable i.e., Baron Durable and Baron Global go up and down completely randomly.
Pair Corralation between Baron Durable and Baron Global
Assuming the 90 days horizon Baron Durable is expected to generate 2.25 times less return on investment than Baron Global. But when comparing it to its historical volatility, Baron Durable Advantage is 1.26 times less risky than Baron Global. It trades about 0.25 of its potential returns per unit of risk. Baron Global Advantage is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 3,605 in Baron Global Advantage on September 1, 2024 and sell it today you would earn a total of 395.00 from holding Baron Global Advantage or generate 10.96% 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 Global Advantage
Performance |
| Timeline |
| Baron Durable Advantage |
| Baron Global Advantage |
Baron Durable and Baron Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Durable and Baron Global
The main advantage of trading using opposite Baron Durable and Baron Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Durable position performs unexpectedly, Baron Global 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 Global will offset losses from the drop in Baron Global's long position.| Baron Durable vs. Federated Kaufmann Large | Baron Durable vs. T Rowe Price | Baron Durable vs. Legg Mason Bw | Baron Durable vs. Qs Large Cap |
| Baron Global vs. Internet Ultrasector Profund | Baron Global vs. Ridgeworth Innovative Growth | Baron Global vs. Transamerica Capital Growth | Baron Global vs. Kinetics Market Opportunities |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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