Correlation Between Baron Health and Towle Deep
Can any of the company-specific risk be diversified away by investing in both Baron Health and Towle Deep 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 Towle Deep 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 Towle Deep Value, you can compare the effects of market volatilities on Baron Health and Towle Deep 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 Towle Deep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Towle Deep.
Diversification Opportunities for Baron Health and Towle Deep
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and Towle is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Towle Deep Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towle Deep Value 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 Towle Deep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towle Deep Value has no effect on the direction of Baron Health i.e., Baron Health and Towle Deep go up and down completely randomly.
Pair Corralation between Baron Health and Towle Deep
Assuming the 90 days horizon Baron Health Care is expected to under-perform the Towle Deep. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baron Health Care is 1.7 times less risky than Towle Deep. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Towle Deep Value is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,772 in Towle Deep Value on August 30, 2024 and sell it today you would earn a total of 131.00 from holding Towle Deep Value or generate 7.39% 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. Towle Deep Value
Performance |
| Timeline |
| Baron Health Care |
| Towle Deep Value |
Baron Health and Towle Deep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Towle Deep
The main advantage of trading using opposite Baron Health and Towle Deep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Towle Deep 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 Towle Deep will offset losses from the drop in Towle Deep's long position.| Baron Health vs. Performance Trust Strategic | Baron Health vs. Mirova Global Green | Baron Health vs. Multisector Bond Sma | Baron Health vs. Astor Longshort Fund |
| Towle Deep vs. Tekla Healthcare Opportunities | Towle Deep vs. Baron Health Care | Towle Deep vs. Health Biotchnology Portfolio | Towle Deep vs. Lord Abbett Health |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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