Correlation Between Third Avenue and Baron Growth
Can any of the company-specific risk be diversified away by investing in both Third Avenue 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 Third Avenue and Baron Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Avenue Value and Baron Growth Fund, you can compare the effects of market volatilities on Third Avenue 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 Third Avenue with a short position of Baron Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Baron Growth.
Diversification Opportunities for Third Avenue and Baron Growth
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Third and BARON is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Value and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth and Third Avenue 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 Third Avenue Value 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 Third Avenue i.e., Third Avenue and Baron Growth go up and down completely randomly.
Pair Corralation between Third Avenue and Baron Growth
Assuming the 90 days horizon Third Avenue Value is expected to under-perform the Baron Growth. In addition to that, Third Avenue is 1.08 times more volatile than Baron Growth Fund. It trades about -0.01 of its total potential returns per unit of risk. Baron Growth Fund is currently generating about 0.05 per unit of volatility. If you would invest 9,886 in Baron Growth Fund on August 29, 2024 and sell it today you would earn a total of 720.00 from holding Baron Growth Fund or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Third Avenue Value vs. Baron Growth Fund
Performance |
| Timeline |
| Third Avenue Value |
| Baron Growth |
Third Avenue and Baron Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Avenue and Baron Growth
The main advantage of trading using opposite Third Avenue and Baron Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Avenue 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.| Third Avenue vs. Ab Small Cap | Third Avenue vs. T Rowe Price | Third Avenue vs. Artisan Thematic Fund | Third Avenue vs. Small Cap Stock |
| Baron Growth vs. Baron Asset Fund | Baron Growth vs. Baron Small Cap | Baron Growth vs. Baron Partners Fund | Baron Growth vs. Fidelity Diversified International |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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