Correlation Between Baron Real and Hennessy Large
Can any of the company-specific risk be diversified away by investing in both Baron Real and Hennessy Large 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 Real and Hennessy Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Real Estate and Hennessy Large Cap, you can compare the effects of market volatilities on Baron Real and Hennessy Large 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 Real with a short position of Hennessy Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Real and Hennessy Large.
Diversification Opportunities for Baron Real and Hennessy Large
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and Hennessy is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Baron Real Estate and Hennessy Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Large Cap and Baron Real 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 Real Estate are associated (or correlated) with Hennessy Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Large Cap has no effect on the direction of Baron Real i.e., Baron Real and Hennessy Large go up and down completely randomly.
Pair Corralation between Baron Real and Hennessy Large
Assuming the 90 days horizon Baron Real is expected to generate 3.29 times less return on investment than Hennessy Large. But when comparing it to its historical volatility, Baron Real Estate is 2.3 times less risky than Hennessy Large. It trades about 0.17 of its potential returns per unit of risk. Hennessy Large Cap is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,816 in Hennessy Large Cap on August 31, 2024 and sell it today you would earn a total of 396.00 from holding Hennessy Large Cap or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Real Estate vs. Hennessy Large Cap
Performance |
| Timeline |
| Baron Real Estate |
| Hennessy Large Cap |
Baron Real and Hennessy Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Real and Hennessy Large
The main advantage of trading using opposite Baron Real and Hennessy Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Real position performs unexpectedly, Hennessy Large 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 Hennessy Large will offset losses from the drop in Hennessy Large's long position.| Baron Real vs. Baron Opportunity Fund | Baron Real vs. Baron Global Advantage | Baron Real vs. Baron Partners Fund | Baron Real vs. Baron Focused Growth |
| Hennessy Large vs. Hennessy Large Cap | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. T Rowe Price |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |