Correlation Between Baron Health and Long-term
Can any of the company-specific risk be diversified away by investing in both Baron Health and Long-term 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 Long-term 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 Long Term Government Fund, you can compare the effects of market volatilities on Baron Health and Long-term 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 Long-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Long-term.
Diversification Opportunities for Baron Health and Long-term
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Long-term is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Long Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Term 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 Long-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Term Government has no effect on the direction of Baron Health i.e., Baron Health and Long-term go up and down completely randomly.
Pair Corralation between Baron Health and Long-term
Assuming the 90 days horizon Baron Health Care is expected to generate 1.09 times more return on investment than Long-term. However, Baron Health is 1.09 times more volatile than Long Term Government Fund. It trades about -0.04 of its potential returns per unit of risk. Long Term Government Fund is currently generating about -0.09 per unit of risk. If you would invest 2,124 in Baron Health Care on September 4, 2024 and sell it today you would lose (49.00) from holding Baron Health Care or give up 2.31% 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. Long Term Government Fund
Performance |
| Timeline |
| Baron Health Care |
| Long Term Government |
Baron Health and Long-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Long-term
The main advantage of trading using opposite Baron Health and Long-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Long-term 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 Long-term will offset losses from the drop in Long-term's long position.| Baron Health vs. Federated Pennsylvania Municipal | Baron Health vs. Franklin High Yield | Baron Health vs. Bbh Intermediate Municipal | Baron Health vs. Vanguard California Long Term |
| Long-term vs. Live Oak Health | Long-term vs. Baron Health Care | Long-term vs. Alphacentric Lifesci Healthcare | Long-term vs. Blackrock Health Sciences |
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 Stocks Directory module to find actively traded stocks across global markets.
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