Correlation Between Vanguard Growth and Baron Growth
Can any of the company-specific risk be diversified away by investing in both Vanguard Growth 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 Vanguard Growth and Baron Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Growth Index and Baron Growth Fund, you can compare the effects of market volatilities on Vanguard Growth 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 Vanguard Growth with a short position of Baron Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and Baron Growth.
Diversification Opportunities for Vanguard Growth and Baron Growth
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Baron is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth and Vanguard Growth 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 Vanguard Growth Index 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 Vanguard Growth i.e., Vanguard Growth and Baron Growth go up and down completely randomly.
Pair Corralation between Vanguard Growth and Baron Growth
Assuming the 90 days horizon Vanguard Growth Index is expected to generate 1.11 times more return on investment than Baron Growth. However, Vanguard Growth is 1.11 times more volatile than Baron Growth Fund. It trades about 0.34 of its potential returns per unit of risk. Baron Growth Fund is currently generating about 0.35 per unit of risk. If you would invest 19,718 in Vanguard Growth Index on September 1, 2024 and sell it today you would earn a total of 1,333 from holding Vanguard Growth Index or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Growth Index vs. Baron Growth Fund
Performance |
| Timeline |
| Vanguard Growth Index |
| Baron Growth |
Vanguard Growth and Baron Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Growth and Baron Growth
The main advantage of trading using opposite Vanguard Growth and Baron Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth 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.| Vanguard Growth vs. Vanguard Value Index | Vanguard Growth vs. Vanguard Mid Cap Index | Vanguard Growth vs. Vanguard Small Cap Growth | Vanguard Growth vs. Vanguard 500 Index |
| Baron Growth vs. Baron Real Estate | Baron Growth vs. Baron Real Estate | Baron Growth vs. Baron Real Estate | Baron Growth vs. Baron Small Cap |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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