Correlation Between Baron Emerging and Baron International
Can any of the company-specific risk be diversified away by investing in both Baron Emerging 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 Emerging 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 Emerging Markets and Baron International Growth, you can compare the effects of market volatilities on Baron Emerging 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 Emerging with a short position of Baron International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Emerging and Baron International.
Diversification Opportunities for Baron Emerging and Baron International
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BARON and Baron is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Baron Emerging Markets 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 Emerging 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 Emerging Markets 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 Emerging i.e., Baron Emerging and Baron International go up and down completely randomly.
Pair Corralation between Baron Emerging and Baron International
Assuming the 90 days horizon Baron Emerging Markets is expected to under-perform the Baron International. In addition to that, Baron Emerging is 1.27 times more volatile than Baron International Growth. It trades about -0.21 of its total potential returns per unit of risk. Baron International Growth is currently generating about -0.13 per unit of volatility. If you would invest 2,735 in Baron International Growth on August 29, 2024 and sell it today you would lose (61.00) from holding Baron International Growth or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Emerging Markets vs. Baron International Growth
Performance |
| Timeline |
| Baron Emerging Markets |
| Baron International |
Baron Emerging and Baron International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Emerging and Baron International
The main advantage of trading using opposite Baron Emerging and Baron International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Emerging 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 Emerging vs. Eaton Vance Income | Baron Emerging vs. Baird Aggregate Bond | Baron Emerging vs. Champlain Small | Baron Emerging vs. Mfs Emerging Markets |
| Baron International vs. Baron Emerging Markets | Baron International vs. Baron Fifth Avenue | Baron International vs. Baron Discovery Fund | Baron International vs. Baron Real Estate |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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