Correlation Between Real Assets and Baron Health
Can any of the company-specific risk be diversified away by investing in both Real Assets 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 Real Assets and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Assets Portfolio and Baron Health Care, you can compare the effects of market volatilities on Real Assets 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 Real Assets with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Assets and Baron Health.
Diversification Opportunities for Real Assets and Baron Health
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Real and Baron is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Real Assets Portfolio 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 Real Assets 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 Real Assets Portfolio 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 Real Assets i.e., Real Assets and Baron Health go up and down completely randomly.
Pair Corralation between Real Assets and Baron Health
Assuming the 90 days horizon Real Assets Portfolio is expected to under-perform the Baron Health. In addition to that, Real Assets is 2.32 times more volatile than Baron Health Care. It trades about -0.3 of its total potential returns per unit of risk. Baron Health Care is currently generating about -0.16 per unit of volatility. If you would invest 2,033 in Baron Health Care on October 10, 2024 and sell it today you would lose (61.00) from holding Baron Health Care or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Assets Portfolio vs. Baron Health Care
Performance |
| Timeline |
| Real Assets Portfolio |
| Baron Health Care |
Real Assets and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Assets and Baron Health
The main advantage of trading using opposite Real Assets and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Assets 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.| Real Assets vs. Emerging Markets Equity | Real Assets vs. Global Fixed Income | Real Assets vs. Global Fixed Income | Real Assets vs. Global Fixed Income |
| Baron Health vs. Leader Short Term Bond | Baron Health vs. Pioneer Amt Free Municipal | Baron Health vs. Bbh Intermediate Municipal | Baron Health vs. Ab Global Bond |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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