Correlation Between Poplar Forest and Baron Discovery
Can any of the company-specific risk be diversified away by investing in both Poplar Forest and Baron Discovery 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 Poplar Forest and Baron Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Poplar Forest Partners and Baron Discovery Fund, you can compare the effects of market volatilities on Poplar Forest and Baron Discovery 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 Poplar Forest with a short position of Baron Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poplar Forest and Baron Discovery.
Diversification Opportunities for Poplar Forest and Baron Discovery
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between POPLAR and Baron is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Poplar Forest Partners and Baron Discovery Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Discovery and Poplar Forest 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 Poplar Forest Partners are associated (or correlated) with Baron Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Discovery has no effect on the direction of Poplar Forest i.e., Poplar Forest and Baron Discovery go up and down completely randomly.
Pair Corralation between Poplar Forest and Baron Discovery
Assuming the 90 days horizon Poplar Forest is expected to generate 1.51 times less return on investment than Baron Discovery. But when comparing it to its historical volatility, Poplar Forest Partners is 1.71 times less risky than Baron Discovery. It trades about 0.08 of its potential returns per unit of risk. Baron Discovery Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,548 in Baron Discovery Fund on September 1, 2024 and sell it today you would earn a total of 950.00 from holding Baron Discovery Fund or generate 37.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Poplar Forest Partners vs. Baron Discovery Fund
Performance |
| Timeline |
| Poplar Forest Partners |
| Baron Discovery |
Poplar Forest and Baron Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Poplar Forest and Baron Discovery
The main advantage of trading using opposite Poplar Forest and Baron Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poplar Forest position performs unexpectedly, Baron Discovery 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 Discovery will offset losses from the drop in Baron Discovery's long position.| Poplar Forest vs. Poplar Forest Partners | Poplar Forest vs. Poplar Forest Nerstone | Poplar Forest vs. Columbia Select Large Cap | Poplar Forest vs. Prudential Qma Mid Cap |
| Baron Discovery vs. Baron Partners Fund | Baron Discovery vs. Baron Global Advantage | Baron Discovery vs. Baron Opportunity Fund | Baron Discovery vs. Baron Fifth Avenue |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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