Correlation Between Baron Real and Baron Small
Can any of the company-specific risk be diversified away by investing in both Baron Real and Baron Small 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 Baron Small 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 Baron Small Cap, you can compare the effects of market volatilities on Baron Real and Baron Small 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 Baron Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Real and Baron Small.
Diversification Opportunities for Baron Real and Baron Small
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Baron is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Baron Real Estate and Baron Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Small 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 Baron Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Small Cap has no effect on the direction of Baron Real i.e., Baron Real and Baron Small go up and down completely randomly.
Pair Corralation between Baron Real and Baron Small
Assuming the 90 days horizon Baron Real Estate is expected to generate 0.7 times more return on investment than Baron Small. However, Baron Real Estate is 1.42 times less risky than Baron Small. It trades about 0.21 of its potential returns per unit of risk. Baron Small Cap is currently generating about 0.09 per unit of risk. If you would invest 1,379 in Baron Real Estate on August 25, 2024 and sell it today you would earn a total of 342.00 from holding Baron Real Estate or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Baron Real Estate vs. Baron Small Cap
Performance |
| Timeline |
| Baron Real Estate |
| Baron Small Cap |
Baron Real and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Real and Baron Small
The main advantage of trading using opposite Baron Real and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Real position performs unexpectedly, Baron Small 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 Small will offset losses from the drop in Baron Small's long position.| Baron Real vs. Baron Real Estate | Baron Real vs. Baron Global Advantage | Baron Real vs. Baron Durable Advantage | Baron Real vs. Baron Wealthbuilder Fund |
| Baron Small vs. Pioneer Diversified High | Baron Small vs. Lord Abbett Diversified | Baron Small vs. Fidelity Advisor Diversified | Baron Small vs. Adams Diversified Equity |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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