Correlation Between Baron Small and Baron Durable
Can any of the company-specific risk be diversified away by investing in both Baron Small and Baron Durable 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 Small and Baron Durable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Small Cap and Baron Durable Advantage, you can compare the effects of market volatilities on Baron Small and Baron Durable 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 Small with a short position of Baron Durable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Small and Baron Durable.
Diversification Opportunities for Baron Small and Baron Durable
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baron and Baron is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Baron Small Cap and Baron Durable Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Durable Advantage and Baron Small 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 Small Cap are associated (or correlated) with Baron Durable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Durable Advantage has no effect on the direction of Baron Small i.e., Baron Small and Baron Durable go up and down completely randomly.
Pair Corralation between Baron Small and Baron Durable
Assuming the 90 days horizon Baron Small is expected to generate 1.76 times less return on investment than Baron Durable. In addition to that, Baron Small is 1.17 times more volatile than Baron Durable Advantage. It trades about 0.06 of its total potential returns per unit of risk. Baron Durable Advantage is currently generating about 0.12 per unit of volatility. If you would invest 1,602 in Baron Durable Advantage on August 25, 2024 and sell it today you would earn a total of 1,205 from holding Baron Durable Advantage or generate 75.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Baron Small Cap vs. Baron Durable Advantage
Performance |
| Timeline |
| Baron Small Cap |
| Baron Durable Advantage |
Baron Small and Baron Durable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Small and Baron Durable
The main advantage of trading using opposite Baron Small and Baron Durable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Small position performs unexpectedly, Baron Durable 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 Durable will offset losses from the drop in Baron Durable's long position.| Baron Small vs. Baron Growth Fund | Baron Small vs. Baron Asset Fund | Baron Small vs. Baron Partners Fund | Baron Small vs. Nasdaq 100 Fund Investor |
| Baron Durable vs. Baron Discovery Fund | Baron Durable vs. Baron Fifth Avenue | Baron Durable vs. Baron Health Care | Baron Durable vs. Baron Wealthbuilder Fund |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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