Correlation Between Us Small and Baron Small
Can any of the company-specific risk be diversified away by investing in both Us Small 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 Us Small and Baron Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Small Cap and Baron Small Cap, you can compare the effects of market volatilities on Us Small 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 Us Small with a short position of Baron Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Small and Baron Small.
Diversification Opportunities for Us Small and Baron Small
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RLESX and Baron is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap 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 Us Small 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 Us Small Cap 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 Us Small i.e., Us Small and Baron Small go up and down completely randomly.
Pair Corralation between Us Small and Baron Small
Assuming the 90 days horizon Us Small Cap is expected to generate 1.21 times more return on investment than Baron Small. However, Us Small is 1.21 times more volatile than Baron Small Cap. It trades about -0.31 of its potential returns per unit of risk. Baron Small Cap is currently generating about -0.52 per unit of risk. If you would invest 2,650 in Us Small Cap on December 1, 2024 and sell it today you would lose (176.00) from holding Us Small Cap or give up 6.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Small Cap vs. Baron Small Cap
Performance |
| Timeline |
| Us Small Cap |
| Baron Small Cap |
Us Small and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Small and Baron Small
The main advantage of trading using opposite Us Small and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Small 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.| Us Small vs. Champlain Small | Us Small vs. Ep Emerging Markets | Us Small vs. Touchstone Small Cap | Us Small vs. Glg Intl Small |
| Baron Small vs. Fidelity Advisor Energy | Baron Small vs. Transamerica Mlp Energy | Baron Small vs. Short Oil Gas | Baron Small vs. Invesco Energy 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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