Correlation Between Baron Health and American Century
Can any of the company-specific risk be diversified away by investing in both Baron Health and American Century 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 Health and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Health Care and American Century Mid, you can compare the effects of market volatilities on Baron Health and American Century 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 Health with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and American Century.
Diversification Opportunities for Baron Health and American Century
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and American is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and American Century Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Mid and Baron Health 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 Health Care are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Mid has no effect on the direction of Baron Health i.e., Baron Health and American Century go up and down completely randomly.
Pair Corralation between Baron Health and American Century
Assuming the 90 days horizon Baron Health is expected to generate 3.79 times less return on investment than American Century. In addition to that, Baron Health is 1.34 times more volatile than American Century Mid. It trades about 0.08 of its total potential returns per unit of risk. American Century Mid is currently generating about 0.4 per unit of volatility. If you would invest 1,686 in American Century Mid on September 4, 2024 and sell it today you would earn a total of 103.00 from holding American Century Mid or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Baron Health Care vs. American Century Mid
Performance |
| Timeline |
| Baron Health Care |
| American Century Mid |
Baron Health and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and American Century
The main advantage of trading using opposite Baron Health and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Baron Health vs. Federated Pennsylvania Municipal | Baron Health vs. Franklin High Yield | Baron Health vs. Bbh Intermediate Municipal | Baron Health vs. Vanguard California Long Term |
| American Century vs. Mid Cap Value | American Century vs. Equity Growth Fund | American Century vs. Income Growth Fund | American Century vs. Diversified Bond 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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