Correlation Between Baron Focused and Federated Equity
Can any of the company-specific risk be diversified away by investing in both Baron Focused and Federated Equity 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 Federated Equity 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 Federated Equity Income, you can compare the effects of market volatilities on Baron Focused and Federated Equity 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 Federated Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Focused and Federated Equity.
Diversification Opportunities for Baron Focused and Federated Equity
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and FEDERATED is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Baron Focused Growth and Federated Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Equity Income 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 Federated Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Equity Income has no effect on the direction of Baron Focused i.e., Baron Focused and Federated Equity go up and down completely randomly.
Pair Corralation between Baron Focused and Federated Equity
Assuming the 90 days horizon Baron Focused Growth is expected to generate 1.37 times more return on investment than Federated Equity. However, Baron Focused is 1.37 times more volatile than Federated Equity Income. It trades about 0.15 of its potential returns per unit of risk. Federated Equity Income is currently generating about 0.17 per unit of risk. If you would invest 3,103 in Baron Focused Growth on August 25, 2024 and sell it today you would earn a total of 1,454 from holding Baron Focused Growth or generate 46.86% 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. Federated Equity Income
Performance |
| Timeline |
| Baron Focused Growth |
| Federated Equity Income |
Baron Focused and Federated Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Focused and Federated Equity
The main advantage of trading using opposite Baron Focused and Federated Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Focused position performs unexpectedly, Federated Equity 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 Federated Equity will offset losses from the drop in Federated Equity's long position.| Baron Focused vs. Federated Equity Income | Baron Focused vs. Ms Global Fixed | Baron Focused vs. Artisan Select Equity | Baron Focused vs. Dreyfusstandish Global Fixed |
| Federated Equity vs. Federated Emerging Market | Federated Equity vs. Federated Mdt All | Federated Equity vs. Federated Global Allocation | Federated Equity vs. Federated Hermes Emerging |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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