Correlation Between Balanced Fund and Baron Growth
Can any of the company-specific risk be diversified away by investing in both Balanced Fund 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 Balanced Fund and Baron Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Baron Growth Fund, you can compare the effects of market volatilities on Balanced Fund 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 Balanced Fund with a short position of Baron Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Baron Growth.
Diversification Opportunities for Balanced Fund and Baron Growth
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Balanced and Baron is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth and Balanced Fund 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 Balanced Fund Investor 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 Balanced Fund i.e., Balanced Fund and Baron Growth go up and down completely randomly.
Pair Corralation between Balanced Fund and Baron Growth
Assuming the 90 days horizon Balanced Fund is expected to generate 1.35 times less return on investment than Baron Growth. But when comparing it to its historical volatility, Balanced Fund Investor is 1.78 times less risky than Baron Growth. It trades about 0.14 of its potential returns per unit of risk. Baron Growth Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,611 in Baron Growth Fund on September 4, 2024 and sell it today you would earn a total of 586.00 from holding Baron Growth Fund or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Balanced Fund Investor vs. Baron Growth Fund
Performance |
| Timeline |
| Balanced Fund Investor |
| Baron Growth |
Balanced Fund and Baron Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Baron Growth
The main advantage of trading using opposite Balanced Fund and Baron Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
| Baron Growth vs. Ab Value Fund | Baron Growth vs. Nasdaq 100 Fund Class | Baron Growth vs. Eic Value Fund | Baron Growth vs. Balanced Fund Investor |
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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