Correlation Between Shelton Emerging and Baron Health
Can any of the company-specific risk be diversified away by investing in both Shelton Emerging 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 Shelton Emerging and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shelton Emerging Markets and Baron Health Care, you can compare the effects of market volatilities on Shelton Emerging 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 Shelton Emerging with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Emerging and Baron Health.
Diversification Opportunities for Shelton Emerging and Baron Health
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shelton and Baron is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets 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 Shelton Emerging 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 Shelton Emerging Markets 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 Shelton Emerging i.e., Shelton Emerging and Baron Health go up and down completely randomly.
Pair Corralation between Shelton Emerging and Baron Health
Assuming the 90 days horizon Shelton Emerging Markets is expected to under-perform the Baron Health. But the mutual fund apears to be less risky and, when comparing its historical volatility, Shelton Emerging Markets is 1.2 times less risky than Baron Health. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Baron Health Care is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,036 in Baron Health Care on September 1, 2024 and sell it today you would earn a total of 34.00 from holding Baron Health Care or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Shelton Emerging Markets vs. Baron Health Care
Performance |
| Timeline |
| Shelton Emerging Markets |
| Baron Health Care |
Shelton Emerging and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Emerging and Baron Health
The main advantage of trading using opposite Shelton Emerging and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging 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.The idea behind Shelton Emerging Markets and Baron Health Care pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Baron Health vs. Black Oak Emerging | Baron Health vs. Transamerica Emerging Markets | Baron Health vs. Ashmore Emerging Markets | Baron Health vs. Shelton Emerging Markets |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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