Correlation Between Baron Global and Global Advantage
Can any of the company-specific risk be diversified away by investing in both Baron Global and Global Advantage 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 Global and Global Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Global Advantage and Global Advantage Portfolio, you can compare the effects of market volatilities on Baron Global and Global Advantage 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 Global with a short position of Global Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Global and Global Advantage.
Diversification Opportunities for Baron Global and Global Advantage
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baron and Global is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Baron Global Advantage and Global Advantage Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Advantage Por and Baron Global 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 Global Advantage are associated (or correlated) with Global Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Advantage Por has no effect on the direction of Baron Global i.e., Baron Global and Global Advantage go up and down completely randomly.
Pair Corralation between Baron Global and Global Advantage
Assuming the 90 days horizon Baron Global is expected to generate 1.43 times less return on investment than Global Advantage. But when comparing it to its historical volatility, Baron Global Advantage is 1.03 times less risky than Global Advantage. It trades about 0.17 of its potential returns per unit of risk. Global Advantage Portfolio is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,660 in Global Advantage Portfolio on November 9, 2024 and sell it today you would earn a total of 112.00 from holding Global Advantage Portfolio or generate 6.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Global Advantage vs. Global Advantage Portfolio
Performance |
| Timeline |
| Baron Global Advantage |
| Global Advantage Por |
Baron Global and Global Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Global and Global Advantage
The main advantage of trading using opposite Baron Global and Global Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Global position performs unexpectedly, Global Advantage 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 Advantage will offset losses from the drop in Global Advantage's long position.| Baron Global vs. Baron Opportunity Fund | Baron Global vs. Morgan Stanley Multi | Baron Global vs. Baron Focused Growth | Baron Global vs. Mid Cap Growth |
| Global Advantage vs. Baron Global Advantage | Global Advantage vs. Global Opportunity Portfolio | Global Advantage vs. Global Advantage Portfolio | Global Advantage vs. International Opportunity Portfolio |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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