Correlation Between Smead Value and Baron Real
Can any of the company-specific risk be diversified away by investing in both Smead Value and Baron Real 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 Smead Value and Baron Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smead Value Fund and Baron Real Estate, you can compare the effects of market volatilities on Smead Value and Baron Real 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 Smead Value with a short position of Baron Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and Baron Real.
Diversification Opportunities for Smead Value and Baron Real
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smead and Baron is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and Baron Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Real Estate and Smead Value 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 Smead Value Fund are associated (or correlated) with Baron Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Real Estate has no effect on the direction of Smead Value i.e., Smead Value and Baron Real go up and down completely randomly.
Pair Corralation between Smead Value and Baron Real
Assuming the 90 days horizon Smead Value is expected to generate 1.35 times less return on investment than Baron Real. But when comparing it to its historical volatility, Smead Value Fund is 1.47 times less risky than Baron Real. It trades about 0.14 of its potential returns per unit of risk. Baron Real Estate is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,074 in Baron Real Estate on August 28, 2024 and sell it today you would earn a total of 133.00 from holding Baron Real Estate or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Smead Value Fund vs. Baron Real Estate
Performance |
| Timeline |
| Smead Value Fund |
| Baron Real Estate |
Smead Value and Baron Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smead Value and Baron Real
The main advantage of trading using opposite Smead Value and Baron Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, Baron Real 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 Real will offset losses from the drop in Baron Real's long position.| Smead Value vs. Matthew 25 Fund | Smead Value vs. Baron Real Estate | Smead Value vs. Buffalo Emerging Opportunities | Smead Value vs. Eventide Gilead Fund |
| Baron Real vs. Baron Opportunity Fund | Baron Real vs. Baron Global Advantage | Baron Real vs. Baron Partners Fund | Baron Real 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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