Correlation Between Baron Focused and Baron Durable
Can any of the company-specific risk be diversified away by investing in both Baron Focused and Baron Durable 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 Baron Durable 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 Baron Durable Advantage, you can compare the effects of market volatilities on Baron Focused and Baron Durable 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 Baron Durable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Focused and Baron Durable.
Diversification Opportunities for Baron Focused and Baron Durable
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Baron is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Baron Focused Growth and Baron Durable Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Durable Advantage 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 Baron Durable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Durable Advantage has no effect on the direction of Baron Focused i.e., Baron Focused and Baron Durable go up and down completely randomly.
Pair Corralation between Baron Focused and Baron Durable
Assuming the 90 days horizon Baron Focused is expected to generate 1.45 times less return on investment than Baron Durable. In addition to that, Baron Focused is 1.01 times more volatile than Baron Durable Advantage. It trades about 0.08 of its total potential returns per unit of risk. Baron Durable Advantage is currently generating about 0.12 per unit of volatility. If you would invest 1,614 in Baron Durable Advantage on August 29, 2024 and sell it today you would earn a total of 1,270 from holding Baron Durable Advantage or generate 78.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Focused Growth vs. Baron Durable Advantage
Performance |
| Timeline |
| Baron Focused Growth |
| Baron Durable Advantage |
Baron Focused and Baron Durable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Focused and Baron Durable
The main advantage of trading using opposite Baron Focused and Baron Durable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Focused position performs unexpectedly, Baron Durable 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 Durable will offset losses from the drop in Baron Durable's long position.| Baron Focused vs. Sterling Capital Short | Baron Focused vs. Franklin Federal Limited Term | Baron Focused vs. Federated Short Intermediate Duration | Baron Focused vs. Barings Active Short |
| Baron Durable vs. Baron Intl Growth | Baron Durable vs. Baron International Growth | Baron Durable vs. Baron Real Estate | Baron Durable 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |