Correlation Between Quantitative and Baron Health
Can any of the company-specific risk be diversified away by investing in both Quantitative 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 Quantitative and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quantitative Longshort Equity and Baron Health Care, you can compare the effects of market volatilities on Quantitative 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 Quantitative with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantitative and Baron Health.
Diversification Opportunities for Quantitative and Baron Health
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Quantitative and Baron is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Quantitative Longshort Equity 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 Quantitative 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 Quantitative Longshort Equity 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 Quantitative i.e., Quantitative and Baron Health go up and down completely randomly.
Pair Corralation between Quantitative and Baron Health
Assuming the 90 days horizon Quantitative is expected to generate 1.94 times less return on investment than Baron Health. But when comparing it to its historical volatility, Quantitative Longshort Equity is 2.62 times less risky than Baron Health. It trades about 0.28 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,948 in Baron Health Care on October 24, 2024 and sell it today you would earn a total of 64.00 from holding Baron Health Care or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quantitative Longshort Equity vs. Baron Health Care
Performance |
| Timeline |
| Quantitative Longshort |
| Baron Health Care |
Quantitative and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quantitative and Baron Health
The main advantage of trading using opposite Quantitative and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantitative 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.| Quantitative vs. Dreyfusstandish Global Fixed | Quantitative vs. Legg Mason Global | Quantitative vs. Wisdomtree Siegel Global | Quantitative vs. Kinetics Global Fund |
| Baron Health vs. Advent Claymore Convertible | Baron Health vs. Virtus Convertible | Baron Health vs. Rationalpier 88 Convertible | Baron Health vs. Fidelity Sai Convertible |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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