Correlation Between Baron Real and American High-income
Can any of the company-specific risk be diversified away by investing in both Baron Real and American High-income 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 American High-income 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 American High Income Municipal, you can compare the effects of market volatilities on Baron Real and American High-income 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 American High-income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Real and American High-income.
Diversification Opportunities for Baron Real and American High-income
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baron and American is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Baron Real Estate and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income 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 American High-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Baron Real i.e., Baron Real and American High-income go up and down completely randomly.
Pair Corralation between Baron Real and American High-income
Assuming the 90 days horizon Baron Real Estate is expected to under-perform the American High-income. In addition to that, Baron Real is 5.25 times more volatile than American High Income Municipal. It trades about -0.25 of its total potential returns per unit of risk. American High Income Municipal is currently generating about -0.35 per unit of volatility. If you would invest 1,544 in American High Income Municipal on October 14, 2024 and sell it today you would lose (28.00) from holding American High Income Municipal or give up 1.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Real Estate vs. American High Income Municipal
Performance |
| Timeline |
| Baron Real Estate |
| American High Income |
Baron Real and American High-income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Real and American High-income
The main advantage of trading using opposite Baron Real and American High-income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Real position performs unexpectedly, American High-income 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 American High-income will offset losses from the drop in American High-income's long position.| Baron Real vs. Aqr Diversified Arbitrage | Baron Real vs. Tiaa Cref Small Cap Blend | Baron Real vs. Northern Small Cap | Baron Real vs. Guggenheim Diversified Income |
| American High-income vs. Rreef Property Trust | American High-income vs. Dunham Real Estate | American High-income vs. Jhancock Real Estate | American High-income vs. Baron Real Estate |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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