Correlation Between Baron Health and Consumer Products
Can any of the company-specific risk be diversified away by investing in both Baron Health and Consumer Products 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 Consumer Products 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 Consumer Products Fund, you can compare the effects of market volatilities on Baron Health and Consumer Products 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 Consumer Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Consumer Products.
Diversification Opportunities for Baron Health and Consumer Products
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Consumer is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Consumer Products Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Products 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 Consumer Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Products has no effect on the direction of Baron Health i.e., Baron Health and Consumer Products go up and down completely randomly.
Pair Corralation between Baron Health and Consumer Products
Assuming the 90 days horizon Baron Health Care is expected to generate 0.94 times more return on investment than Consumer Products. However, Baron Health Care is 1.06 times less risky than Consumer Products. It trades about 0.23 of its potential returns per unit of risk. Consumer Products Fund is currently generating about 0.07 per unit of risk. If you would invest 1,964 in Baron Health Care on November 5, 2024 and sell it today you would earn a total of 75.00 from holding Baron Health Care or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Consumer Products Fund
Performance |
| Timeline |
| Baron Health Care |
| Consumer Products |
Baron Health and Consumer Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Consumer Products
The main advantage of trading using opposite Baron Health and Consumer Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Consumer Products 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 Consumer Products will offset losses from the drop in Consumer Products' long position.| Baron Health vs. Edward Jones Money | Baron Health vs. Gabelli Global Financial | Baron Health vs. Ab Government Exchange | Baron Health vs. Aig Government Money |
| Consumer Products vs. Wmcanx | Consumer Products vs. Furyax | Consumer Products vs. Fkhemx | Consumer Products vs. Wabmsx |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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