Correlation Between Baron Small and Baron Focused
Can any of the company-specific risk be diversified away by investing in both Baron Small and Baron Focused 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 Focused 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 Focused Growth, you can compare the effects of market volatilities on Baron Small and Baron Focused 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 Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Small and Baron Focused.
Diversification Opportunities for Baron Small and Baron Focused
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baron and Baron is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Baron Small Cap and Baron Focused Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Focused Growth 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 Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Focused Growth has no effect on the direction of Baron Small i.e., Baron Small and Baron Focused go up and down completely randomly.
Pair Corralation between Baron Small and Baron Focused
Assuming the 90 days horizon Baron Small Cap is expected to under-perform the Baron Focused. In addition to that, Baron Small is 1.6 times more volatile than Baron Focused Growth. It trades about -0.08 of its total potential returns per unit of risk. Baron Focused Growth is currently generating about 0.26 per unit of volatility. If you would invest 4,433 in Baron Focused Growth on September 12, 2024 and sell it today you would earn a total of 152.00 from holding Baron Focused Growth or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Small Cap vs. Baron Focused Growth
Performance |
| Timeline |
| Baron Small Cap |
| Baron Focused Growth |
Baron Small and Baron Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Small and Baron Focused
The main advantage of trading using opposite Baron Small and Baron Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Small position performs unexpectedly, Baron Focused 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 Focused will offset losses from the drop in Baron Focused'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 Focused vs. Allianzgi Technology Fund | Baron Focused vs. Red Oak Technology | Baron Focused vs. Firsthand Technology Opportunities | Baron Focused vs. Mfs Technology 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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