Correlation Between Growth Fund and Baron Partners
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Baron Partners 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 Growth Fund and Baron Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Baron Partners Fund, you can compare the effects of market volatilities on Growth Fund and Baron Partners 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 Growth Fund with a short position of Baron Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Baron Partners.
Diversification Opportunities for Growth Fund and Baron Partners
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Baron is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Baron Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Partners and Growth Fund 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 Growth Fund Of are associated (or correlated) with Baron Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Partners has no effect on the direction of Growth Fund i.e., Growth Fund and Baron Partners go up and down completely randomly.
Pair Corralation between Growth Fund and Baron Partners
Assuming the 90 days horizon Growth Fund is expected to generate 2.89 times less return on investment than Baron Partners. But when comparing it to its historical volatility, Growth Fund Of is 2.85 times less risky than Baron Partners. It trades about 0.36 of its potential returns per unit of risk. Baron Partners Fund is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 15,861 in Baron Partners Fund on September 1, 2024 and sell it today you would earn a total of 3,157 from holding Baron Partners Fund or generate 19.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Baron Partners Fund
Performance |
| Timeline |
| Growth Fund |
| Baron Partners |
Growth Fund and Baron Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Baron Partners
The main advantage of trading using opposite Growth Fund and Baron Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Baron Partners 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 Partners will offset losses from the drop in Baron Partners' long position.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Washington Mutual Investors | Growth Fund vs. Capital World Growth | Growth Fund vs. American Balanced Fund |
| Baron Partners vs. Nasdaq 100 Fund Investor | Baron Partners vs. Meridian Growth Fund | Baron Partners vs. Baron Opportunity Fund | Baron Partners vs. Baron Small Cap |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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