Correlation Between Schwab Government and Baron Growth
Can any of the company-specific risk be diversified away by investing in both Schwab Government and Baron Growth 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 Schwab Government and Baron Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Government Money and Baron Growth Fund, you can compare the effects of market volatilities on Schwab Government and Baron Growth 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 Schwab Government with a short position of Baron Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Government and Baron Growth.
Diversification Opportunities for Schwab Government and Baron Growth
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Schwab and Baron is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Government Money and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth and Schwab Government 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 Schwab Government Money are associated (or correlated) with Baron Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Growth has no effect on the direction of Schwab Government i.e., Schwab Government and Baron Growth go up and down completely randomly.
Pair Corralation between Schwab Government and Baron Growth
Assuming the 90 days horizon Schwab Government Money is expected to generate 17.69 times more return on investment than Baron Growth. However, Schwab Government is 17.69 times more volatile than Baron Growth Fund. It trades about 0.04 of its potential returns per unit of risk. Baron Growth Fund is currently generating about 0.05 per unit of risk. If you would invest 92.00 in Schwab Government Money on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Schwab Government Money or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Schwab Government Money vs. Baron Growth Fund
Performance |
| Timeline |
| Schwab Government Money |
| Baron Growth |
Schwab Government and Baron Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Government and Baron Growth
The main advantage of trading using opposite Schwab Government and Baron Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Government position performs unexpectedly, Baron Growth 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 Growth will offset losses from the drop in Baron Growth's long position.| Schwab Government vs. Vanguard Total Stock | Schwab Government vs. Vanguard 500 Index | Schwab Government vs. Vanguard Total Stock | Schwab Government vs. Vanguard Total Stock |
| Baron Growth vs. Aig Government Money | Baron Growth vs. Elfun Government Money | Baron Growth vs. Schwab Government Money | Baron Growth vs. Long Term Government Fund |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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