Correlation Between Baron Discovery and Poplar Forest
Can any of the company-specific risk be diversified away by investing in both Baron Discovery and Poplar Forest 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 Poplar Forest 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 Poplar Forest Partners, you can compare the effects of market volatilities on Baron Discovery and Poplar Forest 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 Poplar Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Discovery and Poplar Forest.
Diversification Opportunities for Baron Discovery and Poplar Forest
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and POPLAR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Baron Discovery Fund and Poplar Forest Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poplar Forest Partners 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 Poplar Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poplar Forest Partners has no effect on the direction of Baron Discovery i.e., Baron Discovery and Poplar Forest go up and down completely randomly.
Pair Corralation between Baron Discovery and Poplar Forest
Assuming the 90 days horizon Baron Discovery Fund is expected to generate 1.62 times more return on investment than Poplar Forest. However, Baron Discovery is 1.62 times more volatile than Poplar Forest Partners. It trades about 0.37 of its potential returns per unit of risk. Poplar Forest Partners is currently generating about 0.26 per unit of risk. If you would invest 3,113 in Baron Discovery Fund on August 31, 2024 and sell it today you would earn a total of 385.00 from holding Baron Discovery Fund or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Baron Discovery Fund vs. Poplar Forest Partners
Performance |
| Timeline |
| Baron Discovery |
| Poplar Forest Partners |
Baron Discovery and Poplar Forest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Discovery and Poplar Forest
The main advantage of trading using opposite Baron Discovery and Poplar Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Discovery position performs unexpectedly, Poplar Forest 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 Poplar Forest will offset losses from the drop in Poplar Forest'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 Asset Fund |
| Poplar Forest vs. Poplar Forest Partners | Poplar Forest vs. Poplar Forest Nerstone | Poplar Forest vs. Columbia Select Large Cap | Poplar Forest vs. Prudential Qma Mid Cap |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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