Correlation Between Baron Emerging and Buffalo Small
Can any of the company-specific risk be diversified away by investing in both Baron Emerging and Buffalo 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 Emerging and Buffalo Small 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 Buffalo Small Cap, you can compare the effects of market volatilities on Baron Emerging and Buffalo 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 Emerging with a short position of Buffalo Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Emerging and Buffalo Small.
Diversification Opportunities for Baron Emerging and Buffalo Small
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Baron and Buffalo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Baron Emerging Markets and Buffalo Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo Small Cap 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 Buffalo Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo Small Cap has no effect on the direction of Baron Emerging i.e., Baron Emerging and Buffalo Small go up and down completely randomly.
Pair Corralation between Baron Emerging and Buffalo Small
Assuming the 90 days horizon Baron Emerging is expected to generate 1.1 times less return on investment than Buffalo Small. But when comparing it to its historical volatility, Baron Emerging Markets is 1.4 times less risky than Buffalo Small. It trades about 0.04 of its potential returns per unit of risk. Buffalo Small Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,416 in Buffalo Small Cap on August 31, 2024 and sell it today you would earn a total of 180.00 from holding Buffalo Small Cap or generate 12.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Emerging Markets vs. Buffalo Small Cap
Performance |
| Timeline |
| Baron Emerging Markets |
| Buffalo Small Cap |
Baron Emerging and Buffalo Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Emerging and Buffalo Small
The main advantage of trading using opposite Baron Emerging and Buffalo Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Emerging position performs unexpectedly, Buffalo 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 Buffalo Small will offset losses from the drop in Buffalo Small'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 |
| Buffalo Small vs. The Hartford Midcap | Buffalo Small vs. Mfs Emerging Markets | Buffalo Small vs. Wells Fargo Special | Buffalo Small vs. Baron Emerging Markets |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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