Correlation Between Baron Small and Baron Global
Can any of the company-specific risk be diversified away by investing in both Baron Small and Baron Global 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 Global 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 Global Advantage, you can compare the effects of market volatilities on Baron Small and Baron Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Small and Baron Global.
Diversification Opportunities for Baron Small and Baron Global
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baron and Baron is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Baron Small Cap and Baron Global Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Global 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Global Advantage has no effect on the direction of Baron Small i.e., Baron Small and Baron Global go up and down completely randomly.
Pair Corralation between Baron Small and Baron Global
Assuming the 90 days horizon Baron Small is expected to generate 1.34 times less return on investment than Baron Global. In addition to that, Baron Small is 1.29 times more volatile than Baron Global Advantage. It trades about 0.22 of its total potential returns per unit of risk. Baron Global Advantage is currently generating about 0.38 per unit of volatility. If you would invest 3,652 in Baron Global Advantage on August 28, 2024 and sell it today you would earn a total of 363.00 from holding Baron Global Advantage or generate 9.94% 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 Global Advantage
Performance |
| Timeline |
| Baron Small Cap |
| Baron Global Advantage |
Baron Small and Baron Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Small and Baron Global
The main advantage of trading using opposite Baron Small and Baron Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Small position performs unexpectedly, Baron Global 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 Global will offset losses from the drop in Baron Global's long position.| Baron Small vs. Baron Real Estate | Baron Small vs. Baron Real Estate | Baron Small vs. Baron Real Estate | Baron Small vs. Baron Asset Fund |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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