Correlation Between Baron Health and Federated Government
Can any of the company-specific risk be diversified away by investing in both Baron Health and Federated Government 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 Federated Government 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 Federated Government Ultrashort, you can compare the effects of market volatilities on Baron Health and Federated Government 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 Federated Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Federated Government.
Diversification Opportunities for Baron Health and Federated Government
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baron and Federated is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Federated Government Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Government 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 Federated Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Government has no effect on the direction of Baron Health i.e., Baron Health and Federated Government go up and down completely randomly.
Pair Corralation between Baron Health and Federated Government
Assuming the 90 days horizon Baron Health is expected to generate 14.69 times less return on investment than Federated Government. In addition to that, Baron Health is 8.43 times more volatile than Federated Government Ultrashort. It trades about 0.0 of its total potential returns per unit of risk. Federated Government Ultrashort is currently generating about 0.19 per unit of volatility. If you would invest 954.00 in Federated Government Ultrashort on September 14, 2024 and sell it today you would earn a total of 23.00 from holding Federated Government Ultrashort or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Federated Government Ultrashor
Performance |
| Timeline |
| Baron Health Care |
| Federated Government |
Baron Health and Federated Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Federated Government
The main advantage of trading using opposite Baron Health and Federated Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Federated Government 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 Federated Government will offset losses from the drop in Federated Government's long position.| Baron Health vs. Ab Bond Inflation | Baron Health vs. Goldman Sachs Inflation | Baron Health vs. Ab Bond Inflation | Baron Health vs. Ab Bond Inflation |
| Federated Government vs. Alger Health Sciences | Federated Government vs. Lord Abbett Health | Federated Government vs. Eventide Healthcare Life | Federated Government vs. Baron Health Care |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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