Correlation Between Baron Wealthbuilder and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Baron Wealthbuilder and Growth Strategy 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 Wealthbuilder and Growth Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Wealthbuilder Fund and Growth Strategy Fund, you can compare the effects of market volatilities on Baron Wealthbuilder and Growth Strategy 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 Wealthbuilder with a short position of Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Wealthbuilder and Growth Strategy.
Diversification Opportunities for Baron Wealthbuilder and Growth Strategy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Growth is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Baron Wealthbuilder Fund and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy and Baron Wealthbuilder 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 Wealthbuilder Fund are associated (or correlated) with Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Baron Wealthbuilder i.e., Baron Wealthbuilder and Growth Strategy go up and down completely randomly.
Pair Corralation between Baron Wealthbuilder and Growth Strategy
Assuming the 90 days horizon Baron Wealthbuilder Fund is expected to generate 1.82 times more return on investment than Growth Strategy. However, Baron Wealthbuilder is 1.82 times more volatile than Growth Strategy Fund. It trades about 0.17 of its potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.05 per unit of risk. If you would invest 2,020 in Baron Wealthbuilder Fund on September 13, 2024 and sell it today you would earn a total of 134.00 from holding Baron Wealthbuilder Fund or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Wealthbuilder Fund vs. Growth Strategy Fund
Performance |
| Timeline |
| Baron Wealthbuilder |
| Growth Strategy |
Baron Wealthbuilder and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Wealthbuilder and Growth Strategy
The main advantage of trading using opposite Baron Wealthbuilder and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Wealthbuilder position performs unexpectedly, Growth Strategy 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 Growth Strategy will offset losses from the drop in Growth Strategy's long position.| Baron Wealthbuilder vs. Baron Real Estate | Baron Wealthbuilder vs. Baron Real Estate | Baron Wealthbuilder vs. Baron Real Estate | Baron Wealthbuilder vs. Baron Small Cap |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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