Correlation Between Baron Asset and Baron Intl

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

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

Diversification Opportunities for Baron Asset and Baron Intl

0.43

Correlation Coefficient

Baron Asset  Baron Intl

Very weak diversification

The 3 months correlation between Baron and Baron is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Baron Asset Fund and Baron Intl Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Intl Growth and Baron Asset 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 Baron Asset Fund are associated (or correlated) with Baron Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Intl Growth has no effect on the direction of Baron Asset i.e., Baron Asset and Baron Intl go up and down completely randomly.

Pair Corralation between Baron Asset and Baron Intl

Assuming the 90 days horizon Baron Asset Fund is expected to generate 1.42 times more return on investment than Baron Intl. However, Baron Asset is 1.42 times more volatile than Baron Intl Growth. It trades about 0.01 of its potential returns per unit of risk. Baron Intl Growth is currently generating about 0.01 per unit of risk. If you would invest  9,450  in Baron Asset Fund on October 10, 2024 and sell it today you would earn a total of  358.00  from holding Baron Asset Fund or generate 3.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Baron Asset Fund  vs.  Baron Intl Growth

Baron Asset Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Asset Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Baron Intl Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Baron Asset and Baron Intl

The main advantage of trading using opposite Baron Asset and Baron Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Asset position performs unexpectedly, Baron Intl 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 Intl will offset losses from the drop in Baron Intl's long position.

The idea behind Baron Asset Fund and Baron Intl Growth 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.