Correlation Between Baron Discovery and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both Baron Discovery and Virtus Kar 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 Virtus Kar 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 Virtus Kar Small Cap, you can compare the effects of market volatilities on Baron Discovery and Virtus Kar 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 Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Discovery and Virtus Kar.
Diversification Opportunities for Baron Discovery and Virtus Kar
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Virtus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Baron Discovery Fund and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Baron Discovery i.e., Baron Discovery and Virtus Kar go up and down completely randomly.
Pair Corralation between Baron Discovery and Virtus Kar
Assuming the 90 days horizon Baron Discovery Fund is expected to generate 1.3 times more return on investment than Virtus Kar. However, Baron Discovery is 1.3 times more volatile than Virtus Kar Small Cap. It trades about 0.07 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.09 per unit of risk. If you would invest 2,548 in Baron Discovery Fund on September 1, 2024 and sell it today you would earn a total of 950.00 from holding Baron Discovery Fund or generate 37.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Baron Discovery Fund vs. Virtus Kar Small Cap
Performance |
| Timeline |
| Baron Discovery |
| Virtus Kar Small |
Baron Discovery and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Discovery and Virtus Kar
The main advantage of trading using opposite Baron Discovery and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Discovery position performs unexpectedly, Virtus Kar 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 Virtus Kar will offset losses from the drop in Virtus Kar'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 |
| Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus Kar Mid Cap | Virtus Kar vs. Virtus International Small Cap | Virtus Kar vs. Virtus Kar Small 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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