Correlation Between Baron Health and Vanguard 500
Can any of the company-specific risk be diversified away by investing in both Baron Health and Vanguard 500 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 500 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 500 Index, you can compare the effects of market volatilities on Baron Health and Vanguard 500 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 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Vanguard 500.
Diversification Opportunities for Baron Health and Vanguard 500
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and Vanguard is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Vanguard 500 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard 500 Index 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 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard 500 Index has no effect on the direction of Baron Health i.e., Baron Health and Vanguard 500 go up and down completely randomly.
Pair Corralation between Baron Health and Vanguard 500
Assuming the 90 days horizon Baron Health is expected to generate 3.52 times less return on investment than Vanguard 500. In addition to that, Baron Health is 1.04 times more volatile than Vanguard 500 Index. It trades about 0.03 of its total potential returns per unit of risk. Vanguard 500 Index is currently generating about 0.1 per unit of volatility. If you would invest 19,356 in Vanguard 500 Index on October 17, 2024 and sell it today you would earn a total of 9,164 from holding Vanguard 500 Index or generate 47.34% 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. Vanguard 500 Index
Performance |
| Timeline |
| Baron Health Care |
| Vanguard 500 Index |
Baron Health and Vanguard 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Vanguard 500
The main advantage of trading using opposite Baron Health and Vanguard 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Vanguard 500 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 500 will offset losses from the drop in Vanguard 500's long position.| Baron Health vs. L Abbett Fundamental | Baron Health vs. T Rowe Price | Baron Health vs. Predex Funds | Baron Health vs. Arrow Managed Futures |
| Vanguard 500 vs. Baron Health Care | Vanguard 500 vs. Highland Longshort Healthcare | Vanguard 500 vs. Live Oak Health | Vanguard 500 vs. Prudential Health Sciences |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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