Correlation Between Barloworld and Baron Discovery
Can any of the company-specific risk be diversified away by investing in both Barloworld and Baron Discovery 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 Barloworld and Baron Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barloworld Ltd ADR and Baron Discovery Fund, you can compare the effects of market volatilities on Barloworld and Baron Discovery 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 Barloworld with a short position of Baron Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Baron Discovery.
Diversification Opportunities for Barloworld and Baron Discovery
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barloworld and Baron is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Baron Discovery Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Discovery and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Baron Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Discovery has no effect on the direction of Barloworld i.e., Barloworld and Baron Discovery go up and down completely randomly.
Pair Corralation between Barloworld and Baron Discovery
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 6.69 times more return on investment than Baron Discovery. However, Barloworld is 6.69 times more volatile than Baron Discovery Fund. It trades about 0.21 of its potential returns per unit of risk. Baron Discovery Fund is currently generating about 0.1 per unit of risk. If you would invest 423.00 in Barloworld Ltd ADR on September 13, 2024 and sell it today you would earn a total of 155.00 from holding Barloworld Ltd ADR or generate 36.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Baron Discovery Fund
Performance |
| Timeline |
| Barloworld ADR |
| Baron Discovery |
Barloworld and Baron Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Baron Discovery
The main advantage of trading using opposite Barloworld and Baron Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Baron Discovery 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 Discovery will offset losses from the drop in Baron Discovery's long position.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Baron Discovery vs. Baron Partners Fund | Baron Discovery vs. Baron Global Advantage | Baron Discovery vs. Baron Opportunity Fund | Baron Discovery vs. Baron Fifth Avenue |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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