Correlation Between Us Government and Baron Health
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Baron Health Care, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Baron Health.
Diversification Opportunities for Us Government and Baron Health
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UGSFX and Baron is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities 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 Us 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 Us Government Securities 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 Us Government i.e., Us Government and Baron Health go up and down completely randomly.
Pair Corralation between Us Government and Baron Health
Assuming the 90 days horizon Us Government is expected to generate 4.9 times less return on investment than Baron Health. But when comparing it to its historical volatility, Us Government Securities is 1.91 times less risky than Baron Health. It trades about 0.01 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 1,829 in Baron Health Care on September 4, 2024 and sell it today you would earn a total of 245.00 from holding Baron Health Care or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Us Government Securities vs. Baron Health Care
Performance |
| Timeline |
| Us Government Securities |
| Baron Health Care |
Us Government and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Baron Health
The main advantage of trading using opposite Us Government and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Income Fund Of | Us Government vs. American Mutual Fund | Us Government vs. American Mutual Fund | Us Government vs. American Funds Income |
| Baron Health vs. Virtus Real Estate | Baron Health vs. Prudential Real Estate | Baron Health vs. Amg Managers Centersquare | Baron Health vs. Vanguard Reit Index |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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