Correlation Between New World and Baron Asset
Can any of the company-specific risk be diversified away by investing in both New World and Baron Asset 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 New World and Baron Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Fund and Baron Asset Fund, you can compare the effects of market volatilities on New World and Baron Asset 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 New World with a short position of Baron Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Baron Asset.
Diversification Opportunities for New World and Baron Asset
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between New and Baron is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Baron Asset Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Asset Fund and New World 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 New World Fund are associated (or correlated) with Baron Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Asset Fund has no effect on the direction of New World i.e., New World and Baron Asset go up and down completely randomly.
Pair Corralation between New World and Baron Asset
Assuming the 90 days horizon New World Fund is expected to under-perform the Baron Asset. But the mutual fund apears to be less risky and, when comparing its historical volatility, New World Fund is 1.49 times less risky than Baron Asset. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Baron Asset Fund is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 11,301 in Baron Asset Fund on September 1, 2024 and sell it today you would earn a total of 786.00 from holding Baron Asset Fund or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Baron Asset Fund
Performance |
| Timeline |
| New World Fund |
| Baron Asset Fund |
New World and Baron Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Baron Asset
The main advantage of trading using opposite New World and Baron Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Baron Asset 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 Asset will offset losses from the drop in Baron Asset's long position.| New World vs. International Investors Gold | New World vs. James Balanced Golden | New World vs. Short Precious Metals | New World vs. Gold And Precious |
| Baron Asset vs. John Hancock Disciplined | Baron Asset vs. Baron Growth Fund | Baron Asset vs. Baron Partners Fund | Baron Asset vs. New World Fund |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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