Correlation Between Baron Growth and Baron Durable
Can any of the company-specific risk be diversified away by investing in both Baron Growth 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 Growth 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 Growth Fund and Baron Durable Advantage, you can compare the effects of market volatilities on Baron Growth 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 Growth with a short position of Baron Durable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Growth and Baron Durable.
Diversification Opportunities for Baron Growth and Baron Durable
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Baron is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Baron Growth Fund 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 Growth 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 Growth Fund 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 Growth i.e., Baron Growth and Baron Durable go up and down completely randomly.
Pair Corralation between Baron Growth and Baron Durable
Assuming the 90 days horizon Baron Growth is expected to generate 2.02 times less return on investment than Baron Durable. But when comparing it to its historical volatility, Baron Growth Fund is 1.09 times less risky than Baron Durable. It trades about 0.04 of its potential returns per unit of risk. Baron Durable Advantage is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,430 in Baron Durable Advantage on August 25, 2024 and sell it today you would earn a total of 377.00 from holding Baron Durable Advantage or generate 15.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Baron Growth Fund vs. Baron Durable Advantage
Performance |
| Timeline |
| Baron Growth |
| Baron Durable Advantage |
Baron Growth and Baron Durable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Growth and Baron Durable
The main advantage of trading using opposite Baron Growth and Baron Durable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Growth 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 Growth vs. Baron Asset Fund | Baron Growth vs. Baron Small Cap | Baron Growth vs. Baron Partners Fund | Baron Growth vs. Fidelity Diversified International |
| Baron Durable vs. Baron Discovery Fund | Baron Durable vs. Baron Fifth Avenue | Baron Durable vs. Baron Health Care | Baron Durable vs. Baron Wealthbuilder Fund |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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