Correlation Between Baron Focused and Global Small
Can any of the company-specific risk be diversified away by investing in both Baron Focused and Global 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 Focused and Global Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Focused Growth and Global Small Cap, you can compare the effects of market volatilities on Baron Focused and Global 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 Focused with a short position of Global Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Focused and Global Small.
Diversification Opportunities for Baron Focused and Global Small
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Baron Focused Growth and Global Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Small Cap and Baron Focused 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 Focused Growth are associated (or correlated) with Global Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Small Cap has no effect on the direction of Baron Focused i.e., Baron Focused and Global Small go up and down completely randomly.
Pair Corralation between Baron Focused and Global Small
Assuming the 90 days horizon Baron Focused Growth is expected to generate 0.98 times more return on investment than Global Small. However, Baron Focused Growth is 1.02 times less risky than Global Small. It trades about 0.1 of its potential returns per unit of risk. Global Small Cap is currently generating about 0.06 per unit of risk. If you would invest 2,859 in Baron Focused Growth on September 12, 2024 and sell it today you would earn a total of 1,726 from holding Baron Focused Growth or generate 60.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Baron Focused Growth vs. Global Small Cap
Performance |
| Timeline |
| Baron Focused Growth |
| Global Small Cap |
Baron Focused and Global Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Focused and Global Small
The main advantage of trading using opposite Baron Focused and Global Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Focused position performs unexpectedly, Global 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 Global Small will offset losses from the drop in Global Small's long position.| Baron Focused vs. Allianzgi Technology Fund | Baron Focused vs. Red Oak Technology | Baron Focused vs. Firsthand Technology Opportunities | Baron Focused vs. Mfs Technology Fund |
| Global Small vs. Third Avenue Real | Global Small vs. Third Avenue Small Cap | Global Small vs. Smead Value Fund | Global Small vs. Baron Focused Growth |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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