Correlation Between Baron Select and Baron Small
Can any of the company-specific risk be diversified away by investing in both Baron Select and Baron Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Baron Select and Baron Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Select and Baron Small.
Diversification Opportunities for Baron Select and Baron Small
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baron and Baron is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Baron Select Funds and Baron Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Small Cap has no effect on the direction of Baron Select i.e., Baron Select and Baron Small go up and down completely randomly.
Pair Corralation between Baron Select and Baron Small
Assuming the 90 days horizon Baron Select is expected to generate 1.18 times less return on investment than Baron Small. In addition to that, Baron Select is 1.8 times more volatile than Baron Small Cap. It trades about 0.12 of its total potential returns per unit of risk. Baron Small Cap is currently generating about 0.26 per unit of volatility. If you would invest 3,342 in Baron Small Cap on November 8, 2024 and sell it today you would earn a total of 185.00 from holding Baron Small Cap or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Baron Select Funds vs. Baron Small Cap
Performance |
| Timeline |
| Baron Select Funds |
| Baron Small Cap |
Baron Select and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Select and Baron Small
The main advantage of trading using opposite Baron Select and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Select position performs unexpectedly, Baron Small 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 Small will offset losses from the drop in Baron Small's long position.| Baron Select vs. Us Government Securities | Baron Select vs. Virtus Seix Government | Baron Select vs. Inverse Government Long | Baron Select vs. Intermediate Government Bond |
| Baron Small vs. Qs Global Equity | Baron Small vs. Qs Large Cap | Baron Small vs. Rbc Global Equity | Baron Small vs. T Rowe Price |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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