Correlation Between Baron Opportunity and Baron Health
Can any of the company-specific risk be diversified away by investing in both Baron Opportunity and Baron Health 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 Health 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 Health Care, you can compare the effects of market volatilities on Baron Opportunity and Baron Health 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 Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Opportunity and Baron Health.
Diversification Opportunities for Baron Opportunity and Baron Health
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baron and Baron is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Baron Opportunity Fund and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care 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 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Baron Opportunity i.e., Baron Opportunity and Baron Health go up and down completely randomly.
Pair Corralation between Baron Opportunity and Baron Health
Assuming the 90 days horizon Baron Opportunity Fund is expected to generate 1.12 times more return on investment than Baron Health. However, Baron Opportunity is 1.12 times more volatile than Baron Health Care. It trades about 0.35 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.07 per unit of risk. If you would invest 4,794 in Baron Opportunity Fund on September 3, 2024 and sell it today you would earn a total of 395.00 from holding Baron Opportunity Fund or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Opportunity Fund vs. Baron Health Care
Performance |
| Timeline |
| Baron Opportunity |
| Baron Health Care |
Baron Opportunity and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Opportunity and Baron Health
The main advantage of trading using opposite Baron Opportunity and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Opportunity position performs unexpectedly, Baron Health 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 Health will offset losses from the drop in Baron Health's long position.| Baron Opportunity vs. Multimedia Portfolio Multimedia | Baron Opportunity vs. Sarofim Equity | Baron Opportunity vs. Locorr Dynamic Equity | Baron Opportunity vs. Ms Global Fixed |
| Baron Health vs. Us Government Securities | Baron Health vs. Us Government Securities | Baron Health vs. Aig Government Money | Baron Health vs. Short Term Government 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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