Correlation Between Long Term and Baron Growth
Can any of the company-specific risk be diversified away by investing in both Long Term 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 Long Term and Baron Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long Term Government Fund and Baron Growth Fund, you can compare the effects of market volatilities on Long Term 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 Long Term with a short position of Baron Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Term and Baron Growth.
Diversification Opportunities for Long Term and Baron Growth
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Long and Baron is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Long Term Government Fund and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth and Long Term 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 Long Term Government Fund 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 Long Term i.e., Long Term and Baron Growth go up and down completely randomly.
Pair Corralation between Long Term and Baron Growth
Assuming the 90 days horizon Long Term Government Fund is expected to under-perform the Baron Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Long Term Government Fund is 1.81 times less risky than Baron Growth. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Baron Growth Fund is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 9,890 in Baron Growth Fund on November 3, 2024 and sell it today you would lose (132.00) from holding Baron Growth Fund or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Long Term Government Fund vs. Baron Growth Fund
Performance |
| Timeline |
| Long Term Government |
| Baron Growth |
Long Term and Baron Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long Term and Baron Growth
The main advantage of trading using opposite Long Term and Baron Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Term 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.| Long Term vs. Cref Inflation Linked Bond | Long Term vs. Ab Bond Inflation | Long Term vs. Aqr Managed Futures | Long Term vs. Abbey Capital Futures |
| Baron Growth vs. City National Rochdale | Baron Growth vs. Simt High Yield | Baron Growth vs. Payden High Income | Baron Growth vs. Six Circles Credit |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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