Correlation Between Baron Global and Baron Discovery
Can any of the company-specific risk be diversified away by investing in both Baron Global and Baron Discovery 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 Baron Discovery 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 Baron Discovery Fund, you can compare the effects of market volatilities on Baron Global and Baron Discovery 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 Baron Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Global and Baron Discovery.
Diversification Opportunities for Baron Global and Baron Discovery
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baron and Baron is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Baron Global Advantage and Baron Discovery Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Discovery 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 Baron Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Discovery has no effect on the direction of Baron Global i.e., Baron Global and Baron Discovery go up and down completely randomly.
Pair Corralation between Baron Global and Baron Discovery
Assuming the 90 days horizon Baron Global Advantage is expected to generate 1.01 times more return on investment than Baron Discovery. However, Baron Global is 1.01 times more volatile than Baron Discovery Fund. It trades about 0.08 of its potential returns per unit of risk. Baron Discovery Fund is currently generating about 0.07 per unit of risk. If you would invest 3,149 in Baron Global Advantage on August 25, 2024 and sell it today you would earn a total of 817.00 from holding Baron Global Advantage or generate 25.94% 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. Baron Discovery Fund
Performance |
| Timeline |
| Baron Global Advantage |
| Baron Discovery |
Baron Global and Baron Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Global and Baron Discovery
The main advantage of trading using opposite Baron Global and Baron Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Global position performs unexpectedly, Baron Discovery 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 Discovery will offset losses from the drop in Baron Discovery's long position.| Baron Global vs. Baron Partners Fund | Baron Global vs. Baron Opportunity Fund | Baron Global vs. Baron Discovery Fund | Baron Global vs. Baron Growth Fund |
| Baron Discovery vs. Baron Partners Fund | Baron Discovery vs. Baron Global Advantage | Baron Discovery vs. Baron Opportunity Fund | Baron Discovery vs. Baron Fifth Avenue |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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