Correlation Between Baron Growth and Baron Discovery
Can any of the company-specific risk be diversified away by investing in both Baron Growth 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 Growth 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 Growth Fund and Baron Discovery Fund, you can compare the effects of market volatilities on Baron Growth 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 Growth with a short position of Baron Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Growth and Baron Discovery.
Diversification Opportunities for Baron Growth and Baron Discovery
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baron and Baron is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Baron Growth Fund 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 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 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 Growth i.e., Baron Growth and Baron Discovery go up and down completely randomly.
Pair Corralation between Baron Growth and Baron Discovery
Assuming the 90 days horizon Baron Growth Fund is expected to under-perform the Baron Discovery. In addition to that, Baron Growth is 2.54 times more volatile than Baron Discovery Fund. It trades about -0.19 of its total potential returns per unit of risk. Baron Discovery Fund is currently generating about 0.24 per unit of volatility. If you would invest 3,140 in Baron Discovery Fund on September 19, 2024 and sell it today you would earn a total of 164.00 from holding Baron Discovery Fund or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Growth Fund vs. Baron Discovery Fund
Performance |
| Timeline |
| Baron Growth |
| Baron Discovery |
Baron Growth and Baron Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Growth and Baron Discovery
The main advantage of trading using opposite Baron Growth and Baron Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Growth 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 Growth vs. Baron Partners Fund | Baron Growth vs. Baron Opportunity Fund | Baron Growth vs. Baron Focused Growth | Baron Growth vs. Baron Fifth Avenue |
| Baron Discovery vs. Baron Global Advantage | Baron Discovery vs. Baron Opportunity Fund | Baron Discovery vs. Baron Fifth Avenue | Baron Discovery vs. Baron Focused Growth |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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