Correlation Between Baron Discovery and Baron Fifth
Can any of the company-specific risk be diversified away by investing in both Baron Discovery and Baron Fifth 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 Discovery and Baron Fifth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Discovery Fund and Baron Fifth Avenue, you can compare the effects of market volatilities on Baron Discovery and Baron Fifth 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 Discovery with a short position of Baron Fifth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Discovery and Baron Fifth.
Diversification Opportunities for Baron Discovery and Baron Fifth
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Baron is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Baron Discovery Fund and Baron Fifth Avenue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Fifth Avenue and Baron Discovery 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 Discovery Fund are associated (or correlated) with Baron Fifth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Fifth Avenue has no effect on the direction of Baron Discovery i.e., Baron Discovery and Baron Fifth go up and down completely randomly.
Pair Corralation between Baron Discovery and Baron Fifth
Assuming the 90 days horizon Baron Discovery Fund is expected to generate 0.86 times more return on investment than Baron Fifth. However, Baron Discovery Fund is 1.17 times less risky than Baron Fifth. It trades about -0.08 of its potential returns per unit of risk. Baron Fifth Avenue is currently generating about -0.09 per unit of risk. If you would invest 3,365 in Baron Discovery Fund on November 27, 2024 and sell it today you would lose (70.00) from holding Baron Discovery Fund or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Discovery Fund vs. Baron Fifth Avenue
Performance |
| Timeline |
| Baron Discovery |
| Baron Fifth Avenue |
Baron Discovery and Baron Fifth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Discovery and Baron Fifth
The main advantage of trading using opposite Baron Discovery and Baron Fifth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Discovery position performs unexpectedly, Baron Fifth 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 Fifth will offset losses from the drop in Baron Fifth's long position.| Baron Discovery vs. Baron Global Advantage | Baron Discovery vs. Baron Opportunity Fund | Baron Discovery vs. Baron Fifth Avenue | Baron Discovery vs. Baron Focused Growth |
| Baron Fifth vs. Baron Partners Fund | Baron Fifth vs. Baron Discovery Fund | Baron Fifth vs. Baron Opportunity Fund | Baron Fifth vs. Baron Global Advantage |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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