Correlation Between National Tax and Baron Select
Can any of the company-specific risk be diversified away by investing in both National Tax 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 National Tax and Baron Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Baron Select Funds, you can compare the effects of market volatilities on National Tax 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 National Tax with a short position of Baron Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Tax and Baron Select.
Diversification Opportunities for National Tax and Baron Select
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Baron is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free 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 National Tax 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 The National Tax Free 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 National Tax i.e., National Tax and Baron Select go up and down completely randomly.
Pair Corralation between National Tax and Baron Select
Assuming the 90 days horizon National Tax is expected to generate 13.16 times less return on investment than Baron Select. But when comparing it to its historical volatility, The National Tax Free is 8.64 times less risky than Baron Select. It trades about 0.08 of its potential returns per unit of risk. Baron Select Funds is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,128 in Baron Select Funds on September 15, 2024 and sell it today you would earn a total of 260.00 from holding Baron Select Funds or generate 23.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Baron Select Funds
Performance |
| Timeline |
| National Tax |
| Baron Select Funds |
National Tax and Baron Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Tax and Baron Select
The main advantage of trading using opposite National Tax and Baron Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax 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.| National Tax vs. The Missouri Tax Free | National Tax vs. The Bond Fund | National Tax vs. High Yield Municipal Fund | National Tax vs. Fidelity Intermediate Municipal |
| Baron Select vs. Veea Inc | Baron Select vs. VivoPower International PLC | Baron Select vs. Baron Real Estate | Baron Select vs. Baron Real Estate |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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