Correlation Between Small Company and Baron Small
Can any of the company-specific risk be diversified away by investing in both Small Company and Baron Small 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 Small Company and Baron Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Baron Small Cap, you can compare the effects of market volatilities on Small Company and Baron Small 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 Small Company with a short position of Baron Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Baron Small.
Diversification Opportunities for Small Company and Baron Small
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Baron is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Baron Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Small Cap and Small Company 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 Small Pany Growth are associated (or correlated) with Baron Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Small Cap has no effect on the direction of Small Company i.e., Small Company and Baron Small go up and down completely randomly.
Pair Corralation between Small Company and Baron Small
Assuming the 90 days horizon Small Pany Growth is expected to generate 1.61 times more return on investment than Baron Small. However, Small Company is 1.61 times more volatile than Baron Small Cap. It trades about 0.11 of its potential returns per unit of risk. Baron Small Cap is currently generating about 0.07 per unit of risk. If you would invest 1,218 in Small Pany Growth on September 3, 2024 and sell it today you would earn a total of 451.00 from holding Small Pany Growth or generate 37.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Baron Small Cap
Performance |
| Timeline |
| Small Pany Growth |
| Baron Small Cap |
Small Company and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Baron Small
The main advantage of trading using opposite Small Company and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company position performs unexpectedly, Baron Small 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 Small will offset losses from the drop in Baron Small's long position.| Small Company vs. Mid Cap Growth | Small Company vs. Growth Portfolio Class | Small Company vs. Morgan Stanley Multi | Small Company vs. Emerging Markets Portfolio |
| Baron Small vs. Rbb Fund | Baron Small vs. Baird Smallmid Cap | Baron Small vs. Small Cap Value | Baron Small vs. Artisan Small Cap |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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