Correlation Between Baron Health and Federated Prudent
Can any of the company-specific risk be diversified away by investing in both Baron Health and Federated Prudent 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 Prudent 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 Prudent Bear, you can compare the effects of market volatilities on Baron Health and Federated Prudent 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 Prudent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Federated Prudent.
Diversification Opportunities for Baron Health and Federated Prudent
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baron and Federated is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Federated Prudent Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Prudent Bear 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 Prudent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Prudent Bear has no effect on the direction of Baron Health i.e., Baron Health and Federated Prudent go up and down completely randomly.
Pair Corralation between Baron Health and Federated Prudent
Assuming the 90 days horizon Baron Health Care is expected to under-perform the Federated Prudent. In addition to that, Baron Health is 1.0 times more volatile than Federated Prudent Bear. It trades about -0.23 of its total potential returns per unit of risk. Federated Prudent Bear is currently generating about 0.1 per unit of volatility. If you would invest 474.00 in Federated Prudent Bear on November 28, 2024 and sell it today you would earn a total of 7.00 from holding Federated Prudent Bear or generate 1.48% 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 Prudent Bear
Performance |
| Timeline |
| Baron Health Care |
| Federated Prudent Bear |
Baron Health and Federated Prudent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Federated Prudent
The main advantage of trading using opposite Baron Health and Federated Prudent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Federated Prudent 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 Prudent will offset losses from the drop in Federated Prudent's long position.| Baron Health vs. Fidelity Real Estate | Baron Health vs. Voya Real Estate | Baron Health vs. Forum Real Estate | Baron Health vs. Rreef Property Trust |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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