Correlation Between Baron Opportunity and Needham Growth
Can any of the company-specific risk be diversified away by investing in both Baron Opportunity and Needham Growth 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 Needham Growth 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 Needham Growth Fund, you can compare the effects of market volatilities on Baron Opportunity and Needham Growth 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 Needham Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Opportunity and Needham Growth.
Diversification Opportunities for Baron Opportunity and Needham Growth
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and Needham is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Baron Opportunity Fund and Needham Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Growth 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 Needham Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Growth has no effect on the direction of Baron Opportunity i.e., Baron Opportunity and Needham Growth go up and down completely randomly.
Pair Corralation between Baron Opportunity and Needham Growth
Assuming the 90 days horizon Baron Opportunity Fund is expected to generate 0.67 times more return on investment than Needham Growth. However, Baron Opportunity Fund is 1.49 times less risky than Needham Growth. It trades about 0.2 of its potential returns per unit of risk. Needham Growth Fund is currently generating about -0.12 per unit of risk. If you would invest 4,566 in Baron Opportunity Fund on August 26, 2024 and sell it today you would earn a total of 269.00 from holding Baron Opportunity Fund or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Opportunity Fund vs. Needham Growth Fund
Performance |
| Timeline |
| Baron Opportunity |
| Needham Growth |
Baron Opportunity and Needham Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Opportunity and Needham Growth
The main advantage of trading using opposite Baron Opportunity and Needham Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Opportunity position performs unexpectedly, Needham Growth 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 Needham Growth will offset losses from the drop in Needham Growth's long position.| Baron Opportunity vs. Baron Partners Fund | Baron Opportunity vs. Baron Global Advantage | Baron Opportunity vs. Baron Fifth Avenue | Baron Opportunity vs. Baron Focused Growth |
| Needham Growth vs. Needham Aggressive Growth | Needham Growth vs. Needham Small Cap | Needham Growth vs. Aggressive Investors 1 | Needham Growth vs. Meridian Trarian Fund |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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