Correlation Between Baron Small and Baron Asset
Can any of the company-specific risk be diversified away by investing in both Baron Small and Baron Asset 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 Asset 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 Asset Fund, you can compare the effects of market volatilities on Baron Small and Baron Asset 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 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Small and Baron Asset.
Diversification Opportunities for Baron Small and Baron Asset
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baron and Baron is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Baron Small Cap and Baron Asset Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Asset Fund 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 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Asset Fund has no effect on the direction of Baron Small i.e., Baron Small and Baron Asset go up and down completely randomly.
Pair Corralation between Baron Small and Baron Asset
Assuming the 90 days horizon Baron Small Cap is expected to generate 1.43 times more return on investment than Baron Asset. However, Baron Small is 1.43 times more volatile than Baron Asset Fund. It trades about 0.23 of its potential returns per unit of risk. Baron Asset Fund is currently generating about 0.21 per unit of risk. If you would invest 3,723 in Baron Small Cap on August 25, 2024 and sell it today you would earn a total of 283.00 from holding Baron Small Cap or generate 7.6% 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 Asset Fund
Performance |
| Timeline |
| Baron Small Cap |
| Baron Asset Fund |
Baron Small and Baron Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Small and Baron Asset
The main advantage of trading using opposite Baron Small and Baron Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Small position performs unexpectedly, Baron Asset 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 Asset will offset losses from the drop in Baron Asset's long position.| Baron Small vs. Pioneer Diversified High | Baron Small vs. Lord Abbett Diversified | Baron Small vs. Fidelity Advisor Diversified | Baron Small vs. Adams Diversified Equity |
| Baron Asset vs. Baron Real Estate | Baron Asset vs. Baron Real Estate | Baron Asset vs. Baron Real Estate | Baron Asset vs. Baron Small Cap |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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