Correlation Between Baron Health and Vanguard Extended
Can any of the company-specific risk be diversified away by investing in both Baron Health and Vanguard Extended 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 Vanguard Extended 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 Vanguard Extended Market, you can compare the effects of market volatilities on Baron Health and Vanguard Extended 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 Vanguard Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Vanguard Extended.
Diversification Opportunities for Baron Health and Vanguard Extended
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baron and Vanguard is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Vanguard Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Extended Market 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 Vanguard Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Extended Market has no effect on the direction of Baron Health i.e., Baron Health and Vanguard Extended go up and down completely randomly.
Pair Corralation between Baron Health and Vanguard Extended
Assuming the 90 days horizon Baron Health Care is expected to under-perform the Vanguard Extended. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baron Health Care is 1.04 times less risky than Vanguard Extended. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Vanguard Extended Market is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 37,282 in Vanguard Extended Market on September 13, 2024 and sell it today you would earn a total of 816.00 from holding Vanguard Extended Market or generate 2.19% 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. Vanguard Extended Market
Performance |
| Timeline |
| Baron Health Care |
| Vanguard Extended Market |
Baron Health and Vanguard Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Vanguard Extended
The main advantage of trading using opposite Baron Health and Vanguard Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Vanguard Extended 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 Vanguard Extended will offset losses from the drop in Vanguard Extended's long position.| Baron Health vs. Guidemark Large Cap | Baron Health vs. Old Westbury Large | Baron Health vs. Alternative Asset Allocation | Baron Health vs. Pace Large Growth |
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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