Correlation Between Baron Discovery and Baron Small
Can any of the company-specific risk be diversified away by investing in both Baron Discovery and Baron Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Baron Discovery and Baron Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Discovery and Baron Small.
Diversification Opportunities for Baron Discovery and Baron Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baron and Baron is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Baron Discovery Fund and Baron Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Small Cap has no effect on the direction of Baron Discovery i.e., Baron Discovery and Baron Small go up and down completely randomly.
Pair Corralation between Baron Discovery and Baron Small
Assuming the 90 days horizon Baron Discovery Fund is expected to generate 1.01 times more return on investment than Baron Small. However, Baron Discovery is 1.01 times more volatile than Baron Small Cap. It trades about 0.25 of its potential returns per unit of risk. Baron Small Cap is currently generating about 0.15 per unit of risk. If you would invest 3,060 in Baron Discovery Fund on August 28, 2024 and sell it today you would earn a total of 421.00 from holding Baron Discovery Fund or generate 13.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Discovery Fund vs. Baron Small Cap
Performance |
| Timeline |
| Baron Discovery |
| Baron Small Cap |
Baron Discovery and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Discovery and Baron Small
The main advantage of trading using opposite Baron Discovery and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Discovery position performs unexpectedly, Baron Small 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 Small will offset losses from the drop in Baron Small's long position.| Baron Discovery vs. Baron Real Estate | Baron Discovery vs. Baron Real Estate | Baron Discovery vs. Baron Real Estate | Baron Discovery vs. Baron Asset Fund |
| Baron Small vs. Baron Real Estate | Baron Small vs. Baron Real Estate | Baron Small vs. Baron Real Estate | Baron Small vs. Baron Asset 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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