Correlation Between Baron Opportunity and Needham Small
Can any of the company-specific risk be diversified away by investing in both Baron Opportunity and Needham 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 Needham 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 Needham Small Cap, you can compare the effects of market volatilities on Baron Opportunity and Needham 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 Needham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Opportunity and Needham Small.
Diversification Opportunities for Baron Opportunity and Needham Small
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Needham is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Baron Opportunity Fund and Needham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham 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 Needham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Small Cap has no effect on the direction of Baron Opportunity i.e., Baron Opportunity and Needham Small go up and down completely randomly.
Pair Corralation between Baron Opportunity and Needham Small
Assuming the 90 days horizon Baron Opportunity Fund is expected to generate 0.78 times more return on investment than Needham Small. However, Baron Opportunity Fund is 1.29 times less risky than Needham Small. It trades about 0.12 of its potential returns per unit of risk. Needham Small Cap is currently generating about 0.06 per unit of risk. If you would invest 2,698 in Baron Opportunity Fund on August 26, 2024 and sell it today you would earn a total of 2,137 from holding Baron Opportunity Fund or generate 79.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Opportunity Fund vs. Needham Small Cap
Performance |
| Timeline |
| Baron Opportunity |
| Needham Small Cap |
Baron Opportunity and Needham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Opportunity and Needham Small
The main advantage of trading using opposite Baron Opportunity and Needham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Opportunity position performs unexpectedly, Needham 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 Needham Small will offset losses from the drop in Needham Small'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 Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund | Needham Small vs. Baron Opportunity Fund | Needham Small vs. Jacob Micro Cap |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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