Correlation Between Baron Health and Small-midcap Dividend
Can any of the company-specific risk be diversified away by investing in both Baron Health and Small-midcap Dividend 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 Small-midcap Dividend 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 Small Midcap Dividend Income, you can compare the effects of market volatilities on Baron Health and Small-midcap Dividend 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 Small-midcap Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Small-midcap Dividend.
Diversification Opportunities for Baron Health and Small-midcap Dividend
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and Small-midcap is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Small Midcap Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Midcap Dividend 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 Small-midcap Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Midcap Dividend has no effect on the direction of Baron Health i.e., Baron Health and Small-midcap Dividend go up and down completely randomly.
Pair Corralation between Baron Health and Small-midcap Dividend
Assuming the 90 days horizon Baron Health is expected to generate 4.66 times less return on investment than Small-midcap Dividend. But when comparing it to its historical volatility, Baron Health Care is 1.17 times less risky than Small-midcap Dividend. It trades about 0.08 of its potential returns per unit of risk. Small Midcap Dividend Income is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,929 in Small Midcap Dividend Income on September 4, 2024 and sell it today you would earn a total of 152.00 from holding Small Midcap Dividend Income or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Small Midcap Dividend Income
Performance |
| Timeline |
| Baron Health Care |
| Small Midcap Dividend |
Baron Health and Small-midcap Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Small-midcap Dividend
The main advantage of trading using opposite Baron Health and Small-midcap Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Small-midcap Dividend 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 Small-midcap Dividend will offset losses from the drop in Small-midcap Dividend'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 |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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