Correlation Between The National and Baron Select
Can any of the company-specific risk be diversified away by investing in both The National 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 The National 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 The National 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 The National with a short position of Baron Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of The National and Baron Select.
Diversification Opportunities for The National and Baron Select
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between The and Baron is 0.33. 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 The National 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 The National i.e., The National and Baron Select go up and down completely randomly.
Pair Corralation between The National and Baron Select
Assuming the 90 days horizon The National is expected to generate 21.28 times less return on investment than Baron Select. But when comparing it to its historical volatility, The National Tax Free is 9.74 times less risky than Baron Select. It trades about 0.04 of its potential returns per unit of risk. Baron Select Funds is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,348 in Baron Select Funds on November 3, 2024 and sell it today you would earn a total of 43.00 from holding Baron Select Funds or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Baron Select Funds
Performance |
| Timeline |
| National Tax |
| Baron Select Funds |
The National and Baron Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The National and Baron Select
The main advantage of trading using opposite The National and Baron Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National 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.| The National vs. The Missouri Tax Free | The National vs. The Bond Fund | The National vs. High Yield Municipal Fund | The National vs. Fidelity Intermediate Municipal |
| Baron Select vs. Rationalpier 88 Convertible | Baron Select vs. Lord Abbett Convertible | Baron Select vs. Allianzgi Convertible Income | Baron Select vs. Absolute Convertible Arbitrage |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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