Correlation Between Baron Health and Clearbridge Small
Can any of the company-specific risk be diversified away by investing in both Baron Health and Clearbridge Small 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 Clearbridge Small 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 Clearbridge Small Cap, you can compare the effects of market volatilities on Baron Health and Clearbridge Small 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 Clearbridge Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Clearbridge Small.
Diversification Opportunities for Baron Health and Clearbridge Small
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and Clearbridge is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Clearbridge Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Small Cap 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 Clearbridge Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Small Cap has no effect on the direction of Baron Health i.e., Baron Health and Clearbridge Small go up and down completely randomly.
Pair Corralation between Baron Health and Clearbridge Small
Assuming the 90 days horizon Baron Health is expected to generate 1.43 times less return on investment than Clearbridge Small. But when comparing it to its historical volatility, Baron Health Care is 1.37 times less risky than Clearbridge Small. It trades about 0.05 of its potential returns per unit of risk. Clearbridge Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,920 in Clearbridge Small Cap on August 24, 2024 and sell it today you would earn a total of 1,565 from holding Clearbridge Small Cap or generate 26.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Clearbridge Small Cap
Performance |
| Timeline |
| Baron Health Care |
| Clearbridge Small Cap |
Baron Health and Clearbridge Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Clearbridge Small
The main advantage of trading using opposite Baron Health and Clearbridge Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Clearbridge Small 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 Clearbridge Small will offset losses from the drop in Clearbridge Small's long position.| Baron Health vs. T Rowe Price | Baron Health vs. Nuveen All American Municipal | Baron Health vs. Morningstar Defensive Bond | Baron Health vs. Multisector Bond Sma |
| Clearbridge Small vs. Allianzgi Health Sciences | Clearbridge Small vs. Baron Health Care | Clearbridge Small vs. Alger Health Sciences | Clearbridge Small vs. Health Biotchnology Portfolio |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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