Correlation Between Health Biotchnology and Baron Health
Can any of the company-specific risk be diversified away by investing in both Health Biotchnology and Baron Health 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 Health Biotchnology and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Biotchnology Portfolio and Baron Health Care, you can compare the effects of market volatilities on Health Biotchnology and Baron Health 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 Health Biotchnology with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Biotchnology and Baron Health.
Diversification Opportunities for Health Biotchnology and Baron Health
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Health and Baron is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Health Biotchnology Portfolio and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care and Health Biotchnology 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 Health Biotchnology Portfolio are associated (or correlated) with Baron Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Health Biotchnology i.e., Health Biotchnology and Baron Health go up and down completely randomly.
Pair Corralation between Health Biotchnology and Baron Health
Assuming the 90 days horizon Health Biotchnology Portfolio is expected to generate 0.95 times more return on investment than Baron Health. However, Health Biotchnology Portfolio is 1.05 times less risky than Baron Health. It trades about -0.07 of its potential returns per unit of risk. Baron Health Care is currently generating about -0.14 per unit of risk. If you would invest 2,435 in Health Biotchnology Portfolio on August 24, 2024 and sell it today you would lose (37.00) from holding Health Biotchnology Portfolio or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Biotchnology Portfolio vs. Baron Health Care
Performance |
| Timeline |
| Health Biotchnology |
| Baron Health Care |
Health Biotchnology and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Biotchnology and Baron Health
The main advantage of trading using opposite Health Biotchnology and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Biotchnology position performs unexpectedly, Baron Health 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 Health will offset losses from the drop in Baron Health's long position.| Health Biotchnology vs. Quantitative Longshort Equity | Health Biotchnology vs. Issachar Fund Class | Health Biotchnology vs. Growth Income Fund | Health Biotchnology vs. Omni Small Cap Value |
| Baron Health vs. Hartford Healthcare Hls | Baron Health vs. The Hartford Healthcare | Baron Health vs. Deutsche Health And | Baron Health vs. Blackrock Health Sciences |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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