Correlation Between Baron Real and Third Avenue
Can any of the company-specific risk be diversified away by investing in both Baron Real and Third Avenue 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 Third Avenue 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 Third Avenue Value, you can compare the effects of market volatilities on Baron Real and Third Avenue 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 Third Avenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Real and Third Avenue.
Diversification Opportunities for Baron Real and Third Avenue
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and Third is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Baron Real Estate and Third Avenue Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Avenue Value 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 Third Avenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Avenue Value has no effect on the direction of Baron Real i.e., Baron Real and Third Avenue go up and down completely randomly.
Pair Corralation between Baron Real and Third Avenue
Assuming the 90 days horizon Baron Real Estate is expected to generate 1.04 times more return on investment than Third Avenue. However, Baron Real is 1.04 times more volatile than Third Avenue Value. It trades about 0.16 of its potential returns per unit of risk. Third Avenue Value is currently generating about -0.06 per unit of risk. If you would invest 3,425 in Baron Real Estate on September 1, 2024 and sell it today you would earn a total of 789.00 from holding Baron Real Estate or generate 23.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Real Estate vs. Third Avenue Value
Performance |
| Timeline |
| Baron Real Estate |
| Third Avenue Value |
Baron Real and Third Avenue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Real and Third Avenue
The main advantage of trading using opposite Baron Real and Third Avenue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Real position performs unexpectedly, Third Avenue 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 Third Avenue will offset losses from the drop in Third Avenue'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 |
| Third Avenue vs. Third Avenue Real | Third Avenue vs. Third Avenue Small Cap | Third Avenue vs. Smead Value Fund | Third Avenue vs. Baron Focused Growth |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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