Correlation Between Baron Select and Baron Asset
Can any of the company-specific risk be diversified away by investing in both Baron Select 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 Select 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 Select Funds and Baron Asset Fund, you can compare the effects of market volatilities on Baron Select 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 Select with a short position of Baron Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Select and Baron Asset.
Diversification Opportunities for Baron Select and Baron Asset
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Baron is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Baron Select Funds 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 Select 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 Select Funds 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 Select i.e., Baron Select and Baron Asset go up and down completely randomly.
Pair Corralation between Baron Select and Baron Asset
Assuming the 90 days horizon Baron Select Funds is expected to generate 1.27 times more return on investment than Baron Asset. However, Baron Select is 1.27 times more volatile than Baron Asset Fund. It trades about 0.28 of its potential returns per unit of risk. Baron Asset Fund is currently generating about 0.18 per unit of risk. If you would invest 1,207 in Baron Select Funds on August 26, 2024 and sell it today you would earn a total of 101.00 from holding Baron Select Funds or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Select Funds vs. Baron Asset Fund
Performance |
| Timeline |
| Baron Select Funds |
| Baron Asset Fund |
Baron Select and Baron Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Select and Baron Asset
The main advantage of trading using opposite Baron Select and Baron Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Select 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 Select vs. Ishares Municipal Bond | Baron Select vs. Transamerica Intermediate Muni | Baron Select vs. Morningstar Municipal Bond | Baron Select vs. California High Yield Municipal |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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