Correlation Between Dow Jones and Baron Select
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Baron Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Baron Select Funds, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Baron Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Baron Select.
Diversification Opportunities for Dow Jones and Baron Select
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Baron is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Baron Select go up and down completely randomly.
Pair Corralation between Dow Jones and Baron Select
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.58 times less return on investment than Baron Select. But when comparing it to its historical volatility, Dow Jones Industrial is 2.0 times less risky than Baron Select. It trades about 0.16 of its potential returns per unit of risk. Baron Select Funds is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,040 in Baron Select Funds on September 1, 2024 and sell it today you would earn a total of 273.00 from holding Baron Select Funds or generate 26.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Baron Select Funds
Performance |
| Timeline |
Dow Jones and Baron Select Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Baron Select Funds
Pair trading matchups for Baron Select
Pair Trading with Dow Jones and Baron Select
The main advantage of trading using opposite Dow Jones and Baron Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Baron Select vs. Veea Inc | Baron Select vs. VHAI | Baron Select vs. VivoPower International PLC | Baron Select vs. WEBTOON Entertainment Common |
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 CEOs Directory module to screen CEOs from public companies around the world.
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