Correlation Between Scharf Global and Baron Select
Can any of the company-specific risk be diversified away by investing in both Scharf Global and Baron Select 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 Scharf Global and Baron Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scharf Global Opportunity and Baron Select Funds, you can compare the effects of market volatilities on Scharf Global and Baron Select 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 Scharf Global with a short position of Baron Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and Baron Select.
Diversification Opportunities for Scharf Global and Baron Select
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scharf and Baron is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and Baron Select Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Select Funds and Scharf Global 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 Scharf Global Opportunity are associated (or correlated) with Baron Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Select Funds has no effect on the direction of Scharf Global i.e., Scharf Global and Baron Select go up and down completely randomly.
Pair Corralation between Scharf Global and Baron Select
Assuming the 90 days horizon Scharf Global is expected to generate 3.4 times less return on investment than Baron Select. But when comparing it to its historical volatility, Scharf Global Opportunity is 2.25 times less risky than Baron Select. It trades about 0.09 of its potential returns per unit of risk. Baron Select Funds is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 852.00 in Baron Select Funds on September 15, 2024 and sell it today you would earn a total of 533.00 from holding Baron Select Funds or generate 62.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Scharf Global Opportunity vs. Baron Select Funds
Performance |
| Timeline |
| Scharf Global Opportunity |
| Baron Select Funds |
Scharf Global and Baron Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Global and Baron Select
The main advantage of trading using opposite Scharf Global and Baron Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global position performs unexpectedly, Baron Select 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 Select will offset losses from the drop in Baron Select's long position.| Scharf Global vs. Dreyfus Natural Resources | Scharf Global vs. Adams Natural Resources | Scharf Global vs. Gamco Natural Resources | Scharf Global vs. Firsthand Alternative Energy |
| Baron Select vs. Dreyfusstandish Global Fixed | Baron Select vs. Scharf Global Opportunity | Baron Select vs. Franklin Mutual Global | Baron Select vs. Siit Global Managed |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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