Correlation Between Dana Small and Baron Health
Can any of the company-specific risk be diversified away by investing in both Dana Small 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 Dana Small and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Small Cap and Baron Health Care, you can compare the effects of market volatilities on Dana Small 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 Dana Small with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Small and Baron Health.
Diversification Opportunities for Dana Small and Baron Health
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dana and Baron is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dana Small Cap 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 Dana Small 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 Dana Small Cap 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 Dana Small i.e., Dana Small and Baron Health go up and down completely randomly.
Pair Corralation between Dana Small and Baron Health
Assuming the 90 days horizon Dana Small Cap is expected to generate 1.45 times more return on investment than Baron Health. However, Dana Small is 1.45 times more volatile than Baron Health Care. It trades about 0.05 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.02 per unit of risk. If you would invest 1,281 in Dana Small Cap on September 12, 2024 and sell it today you would earn a total of 271.00 from holding Dana Small Cap or generate 21.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dana Small Cap vs. Baron Health Care
Performance |
| Timeline |
| Dana Small Cap |
| Baron Health Care |
Dana Small and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dana Small and Baron Health
The main advantage of trading using opposite Dana Small and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Small 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.| Dana Small vs. Hennessy Technology Fund | Dana Small vs. Janus Global Technology | Dana Small vs. Firsthand Technology Opportunities | Dana Small vs. Red Oak Technology |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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