Correlation Between Baron International and Brown Capital
Can any of the company-specific risk be diversified away by investing in both Baron International and Brown Capital 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 International and Brown Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron International Growth and The Brown Capital, you can compare the effects of market volatilities on Baron International and Brown Capital 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 International with a short position of Brown Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron International and Brown Capital.
Diversification Opportunities for Baron International and Brown Capital
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Brown is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Baron International Growth and The Brown Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Capital and Baron International 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 International Growth are associated (or correlated) with Brown Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Capital has no effect on the direction of Baron International i.e., Baron International and Brown Capital go up and down completely randomly.
Pair Corralation between Baron International and Brown Capital
Assuming the 90 days horizon Baron International is expected to generate 9.23 times less return on investment than Brown Capital. But when comparing it to its historical volatility, Baron International Growth is 1.22 times less risky than Brown Capital. It trades about 0.04 of its potential returns per unit of risk. The Brown Capital is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,378 in The Brown Capital on September 1, 2024 and sell it today you would earn a total of 118.00 from holding The Brown Capital or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron International Growth vs. The Brown Capital
Performance |
| Timeline |
| Baron International |
| Brown Capital |
Baron International and Brown Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron International and Brown Capital
The main advantage of trading using opposite Baron International and Brown Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron International position performs unexpectedly, Brown Capital 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 Brown Capital will offset losses from the drop in Brown Capital's long position.| Baron International vs. Baron Emerging Markets | Baron International vs. Baron Fifth Avenue | Baron International vs. Baron Discovery Fund | Baron International vs. Baron Real Estate |
| Brown Capital vs. Df Dent Midcap | Brown Capital vs. Baron Emerging Markets | Brown Capital vs. Artisan Developing World | Brown Capital vs. Baron Global Advantage |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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