Correlation Between GM and Baron Select
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Baron Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Baron Select Funds, you can compare the effects of market volatilities on GM 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 GM with a short position of Baron Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Baron Select.
Diversification Opportunities for GM and Baron Select
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Baron is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and Baron Select go up and down completely randomly.
Pair Corralation between GM and Baron Select
Allowing for the 90-day total investment horizon GM is expected to generate 1.0 times less return on investment than Baron Select. In addition to that, GM is 1.51 times more volatile than Baron Select Funds. It trades about 0.09 of its total potential returns per unit of risk. Baron Select Funds is currently generating about 0.13 per unit of volatility. If you would invest 1,030 in Baron Select Funds on August 29, 2024 and sell it today you would earn a total of 272.00 from holding Baron Select Funds or generate 26.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Baron Select Funds
Performance |
| Timeline |
| General Motors |
| Baron Select Funds |
GM and Baron Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Baron Select
The main advantage of trading using opposite GM and Baron Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and Baron Select Funds 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 Select vs. Fidelity Advisor Technology | Baron Select vs. Science Technology Fund | Baron Select vs. Janus Global Technology | Baron Select vs. Blackrock Science Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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