Correlation Between Redwood Real and Baron Health
Can any of the company-specific risk be diversified away by investing in both Redwood Real and Baron Health 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 Redwood Real and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwood Real Estate and Baron Health Care, you can compare the effects of market volatilities on Redwood Real and Baron Health 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 Redwood Real with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwood Real and Baron Health.
Diversification Opportunities for Redwood Real and Baron Health
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Redwood and Baron is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Real Estate and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care and Redwood Real 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 Redwood Real Estate are associated (or correlated) with Baron Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Redwood Real i.e., Redwood Real and Baron Health go up and down completely randomly.
Pair Corralation between Redwood Real and Baron Health
Assuming the 90 days horizon Redwood Real is expected to generate 1.05 times less return on investment than Baron Health. But when comparing it to its historical volatility, Redwood Real Estate is 16.49 times less risky than Baron Health. It trades about 0.47 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,780 in Baron Health Care on October 11, 2024 and sell it today you would earn a total of 201.00 from holding Baron Health Care or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 78.59% |
| Values | Daily Returns |
Redwood Real Estate vs. Baron Health Care
Performance |
| Timeline |
| Redwood Real Estate |
| Baron Health Care |
Redwood Real and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwood Real and Baron Health
The main advantage of trading using opposite Redwood Real and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Real position performs unexpectedly, Baron Health 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 Health will offset losses from the drop in Baron Health's long position.| Redwood Real vs. International Investors Gold | Redwood Real vs. Precious Metals And | Redwood Real vs. Sprott Gold Equity | Redwood Real vs. Goldman Sachs Short |
| Baron Health vs. Tiaa Cref Real Estate | Baron Health vs. Baron Real Estate | Baron Health vs. Pender Real Estate | Baron Health vs. Redwood 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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