Correlation Between Baron Health and Bright Rock
Can any of the company-specific risk be diversified away by investing in both Baron Health and Bright Rock 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 Bright Rock 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 Bright Rock Quality, you can compare the effects of market volatilities on Baron Health and Bright Rock 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 Bright Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Bright Rock.
Diversification Opportunities for Baron Health and Bright Rock
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Bright is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Bright Rock Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Rock Quality 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 Bright Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Rock Quality has no effect on the direction of Baron Health i.e., Baron Health and Bright Rock go up and down completely randomly.
Pair Corralation between Baron Health and Bright Rock
Assuming the 90 days horizon Baron Health Care is expected to generate 0.48 times more return on investment than Bright Rock. However, Baron Health Care is 2.1 times less risky than Bright Rock. It trades about -0.21 of its potential returns per unit of risk. Bright Rock Quality is currently generating about -0.28 per unit of risk. If you would invest 2,033 in Baron Health Care on October 8, 2024 and sell it today you would lose (75.00) from holding Baron Health Care or give up 3.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Bright Rock Quality
Performance |
| Timeline |
| Baron Health Care |
| Bright Rock Quality |
Baron Health and Bright Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Bright Rock
The main advantage of trading using opposite Baron Health and Bright Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Bright Rock 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 Bright Rock will offset losses from the drop in Bright Rock's long position.| Baron Health vs. Scharf Fund Retail | Baron Health vs. Quantitative Longshort Equity | Baron Health vs. Siit Equity Factor | Baron Health vs. Dws Equity Sector |
| Bright Rock vs. Siit Equity Factor | Bright Rock vs. Enhanced Fixed Income | Bright Rock vs. Greenspring Fund Retail | Bright Rock vs. Quantitative Longshort Equity |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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