Correlation Between Baron Emerging and Baron New
Can any of the company-specific risk be diversified away by investing in both Baron Emerging and Baron New 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 New 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 New Asia, you can compare the effects of market volatilities on Baron Emerging and Baron New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Emerging and Baron New.
Diversification Opportunities for Baron Emerging and Baron New
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Baron is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Baron Emerging Markets and Baron New Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron New Asia 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron New Asia has no effect on the direction of Baron Emerging i.e., Baron Emerging and Baron New go up and down completely randomly.
Pair Corralation between Baron Emerging and Baron New
Assuming the 90 days horizon Baron Emerging Markets is expected to generate 1.21 times more return on investment than Baron New. However, Baron Emerging is 1.21 times more volatile than Baron New Asia. It trades about -0.1 of its potential returns per unit of risk. Baron New Asia is currently generating about -0.15 per unit of risk. If you would invest 1,556 in Baron Emerging Markets on September 1, 2024 and sell it today you would lose (29.00) from holding Baron Emerging Markets or give up 1.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 19.05% |
| Values | Daily Returns |
Baron Emerging Markets vs. Baron New Asia
Performance |
| Timeline |
| Baron Emerging Markets |
| Baron New Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Baron Emerging and Baron New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Emerging and Baron New
The main advantage of trading using opposite Baron Emerging and Baron New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Emerging position performs unexpectedly, Baron New 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 New will offset losses from the drop in Baron New'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 New vs. Adams Diversified Equity | Baron New vs. Delaware Limited Term Diversified | Baron New vs. Aqr Diversified Arbitrage | Baron New vs. Sentinel Small Pany |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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