Correlation Between Baron Health and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Baron Health and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Global, you can compare the effects of market volatilities on Baron Health and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Franklin Mutual.
Diversification Opportunities for Baron Health and Franklin Mutual
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Franklin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Baron Health i.e., Baron Health and Franklin Mutual go up and down completely randomly.
Pair Corralation between Baron Health and Franklin Mutual
Assuming the 90 days horizon Baron Health Care is expected to generate 0.96 times more return on investment than Franklin Mutual. However, Baron Health Care is 1.04 times less risky than Franklin Mutual. It trades about 0.02 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about -0.02 per unit of risk. If you would invest 1,986 in Baron Health Care on November 1, 2024 and sell it today you would earn a total of 51.00 from holding Baron Health Care or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Franklin Mutual Global
Performance |
| Timeline |
| Baron Health Care |
| Franklin Mutual Global |
Baron Health and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Franklin Mutual
The main advantage of trading using opposite Baron Health and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual's long position.| Baron Health vs. Tiaa Cref Inflation Link | Baron Health vs. Guidepath Managed Futures | Baron Health vs. Short Duration Inflation | Baron Health vs. Simt Multi Asset Inflation |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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