Correlation Between Baron Partners and Smead Value
Can any of the company-specific risk be diversified away by investing in both Baron Partners and Smead Value 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 Partners and Smead Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Partners Fund and Smead Value Fund, you can compare the effects of market volatilities on Baron Partners and Smead Value 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 Partners with a short position of Smead Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Partners and Smead Value.
Diversification Opportunities for Baron Partners and Smead Value
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Baron and Smead is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Baron Partners Fund and Smead Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Value Fund and Baron Partners 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 Partners Fund are associated (or correlated) with Smead Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Value Fund has no effect on the direction of Baron Partners i.e., Baron Partners and Smead Value go up and down completely randomly.
Pair Corralation between Baron Partners and Smead Value
Assuming the 90 days horizon Baron Partners Fund is expected to generate 1.82 times more return on investment than Smead Value. However, Baron Partners is 1.82 times more volatile than Smead Value Fund. It trades about 0.08 of its potential returns per unit of risk. Smead Value Fund is currently generating about 0.06 per unit of risk. If you would invest 11,604 in Baron Partners Fund on September 12, 2024 and sell it today you would earn a total of 9,448 from holding Baron Partners Fund or generate 81.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Partners Fund vs. Smead Value Fund
Performance |
| Timeline |
| Baron Partners |
| Smead Value Fund |
Baron Partners and Smead Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Partners and Smead Value
The main advantage of trading using opposite Baron Partners and Smead Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Partners position performs unexpectedly, Smead Value 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 Smead Value will offset losses from the drop in Smead Value's long position.| Baron Partners vs. Baron Partners | Baron Partners vs. Baron Focused Growth | Baron Partners vs. Baron Opportunity Fund | Baron Partners vs. Baron Partners Fund |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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