Correlation Between Baron Emerging and Sp Smallcap
Can any of the company-specific risk be diversified away by investing in both Baron Emerging and Sp Smallcap 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 Sp Smallcap 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 Sp Smallcap 600, you can compare the effects of market volatilities on Baron Emerging and Sp Smallcap 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 Sp Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Emerging and Sp Smallcap.
Diversification Opportunities for Baron Emerging and Sp Smallcap
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Baron and RYWAX is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Baron Emerging Markets and Sp Smallcap 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap 600 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 Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap 600 has no effect on the direction of Baron Emerging i.e., Baron Emerging and Sp Smallcap go up and down completely randomly.
Pair Corralation between Baron Emerging and Sp Smallcap
Assuming the 90 days horizon Baron Emerging is expected to generate 2.26 times less return on investment than Sp Smallcap. But when comparing it to its historical volatility, Baron Emerging Markets is 1.38 times less risky than Sp Smallcap. It trades about 0.05 of its potential returns per unit of risk. Sp Smallcap 600 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,328 in Sp Smallcap 600 on August 31, 2024 and sell it today you would earn a total of 1,889 from holding Sp Smallcap 600 or generate 43.65% 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. Sp Smallcap 600
Performance |
| Timeline |
| Baron Emerging Markets |
| Sp Smallcap 600 |
Baron Emerging and Sp Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Emerging and Sp Smallcap
The main advantage of trading using opposite Baron Emerging and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Emerging position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap'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 |
| Sp Smallcap vs. The Hartford Midcap | Sp Smallcap vs. Mfs Emerging Markets | Sp Smallcap vs. Wells Fargo Special | Sp Smallcap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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