Correlation Between Baron International and American Century
Can any of the company-specific risk be diversified away by investing in both Baron International and American Century 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 American Century 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 American Century Small, you can compare the effects of market volatilities on Baron International and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron International and American Century.
Diversification Opportunities for Baron International and American Century
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baron and American is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Baron International Growth and American Century Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Small 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Small has no effect on the direction of Baron International i.e., Baron International and American Century go up and down completely randomly.
Pair Corralation between Baron International and American Century
Assuming the 90 days horizon Baron International is expected to generate 3.59 times less return on investment than American Century. But when comparing it to its historical volatility, Baron International Growth is 1.4 times less risky than American Century. It trades about 0.03 of its potential returns per unit of risk. American Century Small is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,859 in American Century Small on August 26, 2024 and sell it today you would earn a total of 717.00 from holding American Century Small or generate 38.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron International Growth vs. American Century Small
Performance |
| Timeline |
| Baron International |
| American Century Small |
Baron International and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron International and American Century
The main advantage of trading using opposite Baron International and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron International position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Baron International vs. Baron Emerging Markets | Baron International vs. Baron Discovery Fund | Baron International vs. Baron International Growth | Baron International vs. Baron Partners Fund |
| American Century vs. Small Cap Growth | American Century vs. Small Cap Growth | American Century vs. Baron International Growth |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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