Correlation Between Saat Defensive and Baron Health
Can any of the company-specific risk be diversified away by investing in both Saat Defensive 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 Saat Defensive and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saat Defensive Strategy and Baron Health Care, you can compare the effects of market volatilities on Saat Defensive 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 Saat Defensive with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saat Defensive and Baron Health.
Diversification Opportunities for Saat Defensive and Baron Health
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Saat and Baron is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Saat Defensive Strategy 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 Saat Defensive 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 Saat Defensive Strategy 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 Saat Defensive i.e., Saat Defensive and Baron Health go up and down completely randomly.
Pair Corralation between Saat Defensive and Baron Health
Assuming the 90 days horizon Saat Defensive Strategy is expected to generate 0.09 times more return on investment than Baron Health. However, Saat Defensive Strategy is 11.18 times less risky than Baron Health. It trades about 0.31 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.03 per unit of risk. If you would invest 966.00 in Saat Defensive Strategy on August 31, 2024 and sell it today you would earn a total of 6.00 from holding Saat Defensive Strategy or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saat Defensive Strategy vs. Baron Health Care
Performance |
| Timeline |
| Saat Defensive Strategy |
| Baron Health Care |
Saat Defensive and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saat Defensive and Baron Health
The main advantage of trading using opposite Saat Defensive and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saat Defensive 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.| Saat Defensive vs. Prudential Health Sciences | Saat Defensive vs. Alphacentric Lifesci Healthcare | Saat Defensive vs. Live Oak Health | Saat Defensive vs. Baillie Gifford Health |
| Baron Health vs. Vy T Rowe | Baron Health vs. Eaton Vance Atlanta | Baron Health vs. Blackrock Health Sciences | 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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