Correlation Between Baron Select and Baron Emerging

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Can any of the company-specific risk be diversified away by investing in both Baron Select and Baron Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Baron Select and Baron Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Select and Baron Emerging.

Diversification Opportunities for Baron Select and Baron Emerging

BaronBaronDiversified AwayBaronBaronDiversified Away100%
0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Baron and Baron is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Baron Select Funds and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of Baron Select i.e., Baron Select and Baron Emerging go up and down completely randomly.

Pair Corralation between Baron Select and Baron Emerging

Assuming the 90 days horizon Baron Select Funds is expected to under-perform the Baron Emerging. In addition to that, Baron Select is 2.15 times more volatile than Baron Emerging Markets. It trades about -0.07 of its total potential returns per unit of risk. Baron Emerging Markets is currently generating about 0.26 per unit of volatility. If you would invest  1,519  in Baron Emerging Markets on November 25, 2024 and sell it today you would earn a total of  70.00  from holding Baron Emerging Markets or generate 4.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Baron Select Funds  vs.  Baron Emerging Markets

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510
JavaScript chart by amCharts 3.21.15BTEEX BEXIX
       Timeline  
Baron Select Funds 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Baron Select Funds are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Baron Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1313.213.413.613.81414.2
Baron Emerging Markets 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Baron Emerging Markets are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Baron Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb14.614.81515.215.415.615.8

Baron Select and Baron Emerging Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.8-3.6-2.39-1.190.02011.22.443.684.936.17 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15BTEEX BEXIX
       Returns  

Pair Trading with Baron Select and Baron Emerging

The main advantage of trading using opposite Baron Select and Baron Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Select position performs unexpectedly, Baron Emerging 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 Emerging will offset losses from the drop in Baron Emerging's long position.
The idea behind Baron Select Funds and Baron Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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