Correlation Between Sarofim Equity and Baron Opportunity
Can any of the company-specific risk be diversified away by investing in both Sarofim Equity and Baron Opportunity 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 Sarofim Equity and Baron Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarofim Equity and Baron Opportunity Fund, you can compare the effects of market volatilities on Sarofim Equity and Baron Opportunity 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 Sarofim Equity with a short position of Baron Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarofim Equity and Baron Opportunity.
Diversification Opportunities for Sarofim Equity and Baron Opportunity
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sarofim and Baron is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity and Baron Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Opportunity and Sarofim Equity 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 Sarofim Equity are associated (or correlated) with Baron Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Opportunity has no effect on the direction of Sarofim Equity i.e., Sarofim Equity and Baron Opportunity go up and down completely randomly.
Pair Corralation between Sarofim Equity and Baron Opportunity
Assuming the 90 days horizon Sarofim Equity is expected to generate 4.24 times less return on investment than Baron Opportunity. But when comparing it to its historical volatility, Sarofim Equity is 1.41 times less risky than Baron Opportunity. It trades about 0.03 of its potential returns per unit of risk. Baron Opportunity Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,713 in Baron Opportunity Fund on September 3, 2024 and sell it today you would earn a total of 2,476 from holding Baron Opportunity Fund or generate 91.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sarofim Equity vs. Baron Opportunity Fund
Performance |
| Timeline |
| Sarofim Equity |
| Baron Opportunity |
Sarofim Equity and Baron Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarofim Equity and Baron Opportunity
The main advantage of trading using opposite Sarofim Equity and Baron Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarofim Equity position performs unexpectedly, Baron Opportunity 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 Opportunity will offset losses from the drop in Baron Opportunity's long position.| Sarofim Equity vs. Ultra Short Fixed Income | Sarofim Equity vs. Ab Select Equity | Sarofim Equity vs. Gmo Global Equity | Sarofim Equity vs. Rbc Global Equity |
| Baron Opportunity vs. Multimedia Portfolio Multimedia | Baron Opportunity vs. Sarofim Equity | Baron Opportunity vs. Locorr Dynamic Equity | Baron Opportunity vs. Ms Global Fixed |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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