Correlation Between Baron Opportunity and Baron Small
Can any of the company-specific risk be diversified away by investing in both Baron Opportunity and Baron Small 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 Opportunity and Baron Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Opportunity Fund and Baron Small Cap, you can compare the effects of market volatilities on Baron Opportunity and Baron Small 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 Opportunity with a short position of Baron Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Opportunity and Baron Small.
Diversification Opportunities for Baron Opportunity and Baron Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baron and Baron is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Baron Opportunity Fund and Baron Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Small Cap and Baron Opportunity 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 Opportunity Fund are associated (or correlated) with Baron Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Small Cap has no effect on the direction of Baron Opportunity i.e., Baron Opportunity and Baron Small go up and down completely randomly.
Pair Corralation between Baron Opportunity and Baron Small
Assuming the 90 days horizon Baron Opportunity is expected to generate 1.05 times less return on investment than Baron Small. But when comparing it to its historical volatility, Baron Opportunity Fund is 1.24 times less risky than Baron Small. It trades about 0.35 of its potential returns per unit of risk. Baron Small Cap is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,671 in Baron Small Cap on September 1, 2024 and sell it today you would earn a total of 341.00 from holding Baron Small Cap or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Opportunity Fund vs. Baron Small Cap
Performance |
| Timeline |
| Baron Opportunity |
| Baron Small Cap |
Baron Opportunity and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Opportunity and Baron Small
The main advantage of trading using opposite Baron Opportunity and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Opportunity position performs unexpectedly, Baron Small 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 Baron Small will offset losses from the drop in Baron Small's long position.| Baron Opportunity vs. Baron Partners Fund | Baron Opportunity vs. Baron Global Advantage | Baron Opportunity vs. Baron Focused Growth | Baron Opportunity vs. Baron Discovery Fund |
| Baron Small vs. Small Pany Growth | Baron Small vs. Us Small Cap | Baron Small vs. Chartwell Small Cap | Baron Small vs. Qs Small Capitalization |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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