Correlation Between Midcap Fund and Baron Growth
Can any of the company-specific risk be diversified away by investing in both Midcap Fund and Baron Growth 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 Midcap Fund and Baron Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midcap Fund Class and Baron Growth Fund, you can compare the effects of market volatilities on Midcap Fund and Baron Growth 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 Midcap Fund with a short position of Baron Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Fund and Baron Growth.
Diversification Opportunities for Midcap Fund and Baron Growth
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Midcap and Baron is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund Class and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth and Midcap Fund 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 Midcap Fund Class are associated (or correlated) with Baron Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Growth has no effect on the direction of Midcap Fund i.e., Midcap Fund and Baron Growth go up and down completely randomly.
Pair Corralation between Midcap Fund and Baron Growth
Assuming the 90 days horizon Midcap Fund Class is expected to generate 1.13 times more return on investment than Baron Growth. However, Midcap Fund is 1.13 times more volatile than Baron Growth Fund. It trades about 0.43 of its potential returns per unit of risk. Baron Growth Fund is currently generating about 0.35 per unit of risk. If you would invest 4,352 in Midcap Fund Class on September 1, 2024 and sell it today you would earn a total of 380.00 from holding Midcap Fund Class or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Midcap Fund Class vs. Baron Growth Fund
Performance |
| Timeline |
| Midcap Fund Class |
| Baron Growth |
Midcap Fund and Baron Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midcap Fund and Baron Growth
The main advantage of trading using opposite Midcap Fund and Baron Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap Fund position performs unexpectedly, Baron Growth 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 Growth will offset losses from the drop in Baron Growth's long position.| Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management |
| Baron Growth vs. Baron Real Estate | Baron Growth vs. Baron Real Estate | Baron Growth vs. Baron Real Estate | Baron Growth vs. Baron 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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