Correlation Between Baron Discovery and Baron Focused
Can any of the company-specific risk be diversified away by investing in both Baron Discovery and Baron Focused 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 Focused 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 Focused Growth, you can compare the effects of market volatilities on Baron Discovery and Baron Focused 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 Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Discovery and Baron Focused.
Diversification Opportunities for Baron Discovery and Baron Focused
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Baron is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Baron Discovery Fund and Baron Focused Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Focused Growth 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 Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Focused Growth has no effect on the direction of Baron Discovery i.e., Baron Discovery and Baron Focused go up and down completely randomly.
Pair Corralation between Baron Discovery and Baron Focused
Assuming the 90 days horizon Baron Discovery is expected to generate 1.01 times less return on investment than Baron Focused. In addition to that, Baron Discovery is 1.23 times more volatile than Baron Focused Growth. It trades about 0.21 of its total potential returns per unit of risk. Baron Focused Growth is currently generating about 0.26 per unit of volatility. If you would invest 4,076 in Baron Focused Growth on August 29, 2024 and sell it today you would earn a total of 705.00 from holding Baron Focused Growth or generate 17.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Discovery Fund vs. Baron Focused Growth
Performance |
| Timeline |
| Baron Discovery |
| Baron Focused Growth |
Baron Discovery and Baron Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Discovery and Baron Focused
The main advantage of trading using opposite Baron Discovery and Baron Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Discovery position performs unexpectedly, Baron Focused 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 Focused will offset losses from the drop in Baron Focused's long position.| Baron Discovery vs. Baron Partners Fund | Baron Discovery vs. Baron Global Advantage | Baron Discovery vs. Baron Opportunity Fund | Baron Discovery vs. Baron Fifth Avenue |
| Baron Focused vs. Baron Partners Fund | Baron Focused vs. Baron Opportunity Fund | Baron Focused vs. Baron Focused Growth | Baron Focused vs. Baron Fifth Avenue |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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