Correlation Between Amazon and Baron Growth

Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Baron Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amazon Inc and Baron Growth Fund, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Baron Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Baron Growth.

Diversification Opportunities for Amazon and Baron Growth

0.92

Correlation Coefficient

Amazon  Baron Growth

Almost no diversification

The 3 months correlation between Amazon and Baron is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Baron Growth go up and down completely randomly.

Pair Corralation between Amazon and Baron Growth

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Baron Growth. In addition to that, Amazon is 1.85 times more volatile than Baron Growth Fund. It trades about -0.12 of its total potential returns per unit of risk. Baron Growth Fund is currently generating about -0.05 per unit of volatility. If you would invest  9,555  in Baron Growth Fund on December 28, 2024 and sell it today you would lose (317.00) from holding Baron Growth Fund or give up 3.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Amazon Inc  vs.  Baron Growth Fund

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Baron Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Baron Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and Baron Growth

The main advantage of trading using opposite Amazon and Baron Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.

The idea behind Amazon Inc and Baron Growth Fund 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.