Correlation Between Stone Toro and Baron Health
Can any of the company-specific risk be diversified away by investing in both Stone Toro 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 Stone Toro and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Toro Market and Baron Health Care, you can compare the effects of market volatilities on Stone Toro 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 Stone Toro with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Toro and Baron Health.
Diversification Opportunities for Stone Toro and Baron Health
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stone and Baron is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Stone Toro Market 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 Stone Toro 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 Stone Toro Market 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 Stone Toro i.e., Stone Toro and Baron Health go up and down completely randomly.
Pair Corralation between Stone Toro and Baron Health
Assuming the 90 days horizon Stone Toro is expected to generate 2.91 times less return on investment than Baron Health. But when comparing it to its historical volatility, Stone Toro Market is 3.78 times less risky than Baron Health. It trades about 0.05 of its potential returns per unit of risk. Baron Health Care is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,824 in Baron Health Care on September 3, 2024 and sell it today you would earn a total of 247.00 from holding Baron Health Care or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stone Toro Market vs. Baron Health Care
Performance |
| Timeline |
| Stone Toro Market |
| Baron Health Care |
Stone Toro and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Toro and Baron Health
The main advantage of trading using opposite Stone Toro and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Toro 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.| Stone Toro vs. Gmo Global Equity | Stone Toro vs. The Fixed Income | Stone Toro vs. Locorr Dynamic Equity | Stone Toro vs. The Hartford Equity |
| Baron Health vs. Vanguard Health Care | Baron Health vs. Vanguard Health Care | Baron Health vs. T Rowe Price | Baron Health vs. T Rowe Price |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |