Correlation Between Baron Small and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Baron Small and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Real, you can compare the effects of market volatilities on Baron Small and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Small and Goldman Sachs.
Diversification Opportunities for Baron Small and Goldman Sachs
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Baron and Goldman is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Baron Small Cap and Goldman Sachs Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Real 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Real has no effect on the direction of Baron Small i.e., Baron Small and Goldman Sachs go up and down completely randomly.
Pair Corralation between Baron Small and Goldman Sachs
Assuming the 90 days horizon Baron Small Cap is expected to generate 1.02 times more return on investment than Goldman Sachs. However, Baron Small is 1.02 times more volatile than Goldman Sachs Real. It trades about 0.07 of its potential returns per unit of risk. Goldman Sachs Real is currently generating about 0.04 per unit of risk. If you would invest 2,795 in Baron Small Cap on September 3, 2024 and sell it today you would earn a total of 1,215 from holding Baron Small Cap or generate 43.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Small Cap vs. Goldman Sachs Real
Performance |
| Timeline |
| Baron Small Cap |
| Goldman Sachs Real |
Baron Small and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Small and Goldman Sachs
The main advantage of trading using opposite Baron Small and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Small position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Baron Small vs. Calamos Market Neutral | Baron Small vs. Kinetics Market Opportunities | Baron Small vs. Templeton Developing Markets | Baron Small vs. Mondrian Emerging Markets |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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