Correlation Between Hodges Small and Baron Real
Can any of the company-specific risk be diversified away by investing in both Hodges Small and Baron Real 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 Hodges Small and Baron Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hodges Small Cap and Baron Real Estate, you can compare the effects of market volatilities on Hodges Small and Baron Real 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 Hodges Small with a short position of Baron Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hodges Small and Baron Real.
Diversification Opportunities for Hodges Small and Baron Real
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hodges and Baron is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hodges Small Cap and Baron Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Real Estate and Hodges 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 Hodges Small Cap are associated (or correlated) with Baron Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Real Estate has no effect on the direction of Hodges Small i.e., Hodges Small and Baron Real go up and down completely randomly.
Pair Corralation between Hodges Small and Baron Real
Assuming the 90 days horizon Hodges Small Cap is expected to generate 1.15 times more return on investment than Baron Real. However, Hodges Small is 1.15 times more volatile than Baron Real Estate. It trades about 0.06 of its potential returns per unit of risk. Baron Real Estate is currently generating about 0.07 per unit of risk. If you would invest 1,723 in Hodges Small Cap on September 12, 2024 and sell it today you would earn a total of 815.00 from holding Hodges Small Cap or generate 47.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hodges Small Cap vs. Baron Real Estate
Performance |
| Timeline |
| Hodges Small Cap |
| Baron Real Estate |
Hodges Small and Baron Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hodges Small and Baron Real
The main advantage of trading using opposite Hodges Small and Baron Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hodges Small position performs unexpectedly, Baron Real 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 Real will offset losses from the drop in Baron Real's long position.| Hodges Small vs. Sp Midcap Index | Hodges Small vs. Sp 500 Index | Hodges Small vs. Nasdaq 100 Index Fund | Hodges Small vs. Deutsche Sp 500 |
| Baron Real vs. Baron Opportunity Fund | Baron Real vs. Baron Global Advantage | Baron Real vs. Baron Partners Fund | Baron Real vs. Baron Focused Growth |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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