Correlation Between Baron Health and Baron Partners
Can any of the company-specific risk be diversified away by investing in both Baron Health and Baron Partners 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 Baron Partners 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 Baron Partners Fund, you can compare the effects of market volatilities on Baron Health and Baron Partners 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 Baron Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Baron Partners.
Diversification Opportunities for Baron Health and Baron Partners
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baron and Baron is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Baron Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Partners 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 Baron Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Partners has no effect on the direction of Baron Health i.e., Baron Health and Baron Partners go up and down completely randomly.
Pair Corralation between Baron Health and Baron Partners
Assuming the 90 days horizon Baron Health is expected to generate 2.2 times less return on investment than Baron Partners. But when comparing it to its historical volatility, Baron Health Care is 2.05 times less risky than Baron Partners. It trades about 0.04 of its potential returns per unit of risk. Baron Partners Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 14,977 in Baron Partners Fund on September 1, 2024 and sell it today you would earn a total of 4,041 from holding Baron Partners Fund or generate 26.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Baron Partners Fund
Performance |
| Timeline |
| Baron Health Care |
| Baron Partners |
Baron Health and Baron Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Baron Partners
The main advantage of trading using opposite Baron Health and Baron Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Baron Partners 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 Partners will offset losses from the drop in Baron Partners' long position.| Baron Health vs. California High Yield Municipal | Baron Health vs. Franklin High Income | Baron Health vs. T Rowe Price | Baron Health vs. Needham Aggressive Growth |
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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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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