Correlation Between NYSE Composite and Baron Discovery
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Baron Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Baron Discovery Fund, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Baron Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Baron Discovery.
Diversification Opportunities for NYSE Composite and Baron Discovery
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Baron is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Baron Discovery Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Discovery and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Baron Discovery go up and down completely randomly.
Pair Corralation between NYSE Composite and Baron Discovery
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.61 times less return on investment than Baron Discovery. But when comparing it to its historical volatility, NYSE Composite is 2.24 times less risky than Baron Discovery. It trades about 0.23 of its potential returns per unit of risk. Baron Discovery Fund is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 2,997 in Baron Discovery Fund on August 29, 2024 and sell it today you would earn a total of 384.00 from holding Baron Discovery Fund or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Baron Discovery Fund
Performance |
| Timeline |
NYSE Composite and Baron Discovery Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Baron Discovery Fund
Pair trading matchups for Baron Discovery
Pair Trading with NYSE Composite and Baron Discovery
The main advantage of trading using opposite NYSE Composite and Baron Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| Baron Discovery vs. Baron Global Advantage | Baron Discovery vs. Baron Opportunity Fund | Baron Discovery vs. Baron Fifth Avenue | Baron Discovery 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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