Correlation Between Baron Growth and Sp 500
Can any of the company-specific risk be diversified away by investing in both Baron Growth and Sp 500 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 Sp 500 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 Sp 500 Equal, you can compare the effects of market volatilities on Baron Growth and Sp 500 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 Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Growth and Sp 500.
Diversification Opportunities for Baron Growth and Sp 500
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and INDEX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Baron Growth Fund and Sp 500 Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Equal 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 Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Equal has no effect on the direction of Baron Growth i.e., Baron Growth and Sp 500 go up and down completely randomly.
Pair Corralation between Baron Growth and Sp 500
Assuming the 90 days horizon Baron Growth Fund is expected to generate 1.14 times more return on investment than Sp 500. However, Baron Growth is 1.14 times more volatile than Sp 500 Equal. It trades about 0.37 of its potential returns per unit of risk. Sp 500 Equal is currently generating about 0.34 per unit of risk. If you would invest 9,952 in Baron Growth Fund on September 2, 2024 and sell it today you would earn a total of 663.00 from holding Baron Growth Fund or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Growth Fund vs. Sp 500 Equal
Performance |
| Timeline |
| Baron Growth |
| Sp 500 Equal |
Baron Growth and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Growth and Sp 500
The main advantage of trading using opposite Baron Growth and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Growth position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500'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 |
| Sp 500 vs. Morgan Stanley Global | Sp 500 vs. Us Global Investors | Sp 500 vs. T Rowe Price | Sp 500 vs. Dreyfusstandish Global Fixed |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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