Correlation Between Baron Small and Baron Select
Can any of the company-specific risk be diversified away by investing in both Baron Small and Baron Select 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 Select 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 Select Funds, you can compare the effects of market volatilities on Baron Small and Baron Select 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 Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Small and Baron Select.
Diversification Opportunities for Baron Small and Baron Select
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 Select Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Select Funds 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 Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Select Funds has no effect on the direction of Baron Small i.e., Baron Small and Baron Select go up and down completely randomly.
Pair Corralation between Baron Small and Baron Select
Assuming the 90 days horizon Baron Small is expected to generate 1.87 times less return on investment than Baron Select. But when comparing it to its historical volatility, Baron Small Cap is 1.26 times less risky than Baron Select. It trades about 0.09 of its potential returns per unit of risk. Baron Select Funds is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 641.00 in Baron Select Funds on August 26, 2024 and sell it today you would earn a total of 667.00 from holding Baron Select Funds or generate 104.06% 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 Select Funds
Performance |
| Timeline |
| Baron Small Cap |
| Baron Select Funds |
Baron Small and Baron Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Small and Baron Select
The main advantage of trading using opposite Baron Small and Baron Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Small position performs unexpectedly, Baron Select 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 Select will offset losses from the drop in Baron Select'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 Select vs. Ishares Municipal Bond | Baron Select vs. Transamerica Intermediate Muni | Baron Select vs. Morningstar Municipal Bond | Baron Select vs. California High Yield Municipal |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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