Correlation Between VEEA and Baron Small
Can any of the company-specific risk be diversified away by investing in both VEEA and Baron Small 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 VEEA and Baron Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VEEA and Baron Small Cap, you can compare the effects of market volatilities on VEEA and Baron Small 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 VEEA with a short position of Baron Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of VEEA and Baron Small.
Diversification Opportunities for VEEA and Baron Small
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between VEEA and Baron is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding VEEA and Baron Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Small Cap and VEEA 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 VEEA are associated (or correlated) with Baron Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Small Cap has no effect on the direction of VEEA i.e., VEEA and Baron Small go up and down completely randomly.
Pair Corralation between VEEA and Baron Small
Given the investment horizon of 90 days VEEA is expected to under-perform the Baron Small. In addition to that, VEEA is 17.75 times more volatile than Baron Small Cap. It trades about -0.05 of its total potential returns per unit of risk. Baron Small Cap is currently generating about 0.07 per unit of volatility. If you would invest 2,757 in Baron Small Cap on August 29, 2024 and sell it today you would earn a total of 1,269 from holding Baron Small Cap or generate 46.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 10.91% |
| Values | Daily Returns |
VEEA vs. Baron Small Cap
Performance |
| Timeline |
| VEEA |
| Baron Small Cap |
VEEA and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VEEA and Baron Small
The main advantage of trading using opposite VEEA and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VEEA position performs unexpectedly, Baron Small 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 Small will offset losses from the drop in Baron Small's long position.The idea behind VEEA and Baron Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Baron Small vs. Baron Partners Fund | Baron Small vs. Baron Global Advantage | Baron Small vs. Baron Opportunity Fund | Baron Small vs. Baron Fifth Avenue |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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