Correlation Between Baron Discovery and Baron International
Can any of the company-specific risk be diversified away by investing in both Baron Discovery and Baron International 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 International 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 International Growth, you can compare the effects of market volatilities on Baron Discovery and Baron International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Discovery and Baron International.
Diversification Opportunities for Baron Discovery and Baron International
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and Baron is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Baron Discovery Fund and Baron International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron International has no effect on the direction of Baron Discovery i.e., Baron Discovery and Baron International go up and down completely randomly.
Pair Corralation between Baron Discovery and Baron International
Assuming the 90 days horizon Baron Discovery is expected to generate 2.66 times less return on investment than Baron International. In addition to that, Baron Discovery is 1.95 times more volatile than Baron International Growth. It trades about 0.01 of its total potential returns per unit of risk. Baron International Growth is currently generating about 0.07 per unit of volatility. If you would invest 2,752 in Baron International Growth on September 12, 2024 and sell it today you would earn a total of 24.00 from holding Baron International Growth or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Discovery Fund vs. Baron International Growth
Performance |
| Timeline |
| Baron Discovery |
| Baron International |
Baron Discovery and Baron International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Discovery and Baron International
The main advantage of trading using opposite Baron Discovery and Baron International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Discovery position performs unexpectedly, Baron International 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 International will offset losses from the drop in Baron International's long position.| Baron Discovery vs. Needham Aggressive Growth | Baron Discovery vs. Ultramid Cap Profund Ultramid Cap | Baron Discovery vs. HUMANA INC | Baron Discovery vs. Barloworld Ltd ADR |
| Baron International vs. Baron Emerging Markets | Baron International vs. Baron Discovery Fund | Baron International vs. Baron International Growth | Baron International vs. Baron Partners Fund |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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