Correlation Between Baron Durable and Champlain Mid

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

By analyzing existing cross correlation between Baron Durable Advantage and Champlain Mid Cap, you can compare the effects of market volatilities on Baron Durable and Champlain Mid 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 Durable with a short position of Champlain Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Durable and Champlain Mid.

Diversification Opportunities for Baron Durable and Champlain Mid

0.08

Correlation Coefficient

Baron Durable  Champlain Mid

Significant diversification

The 3 months correlation between Baron and Champlain is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Baron Durable Advantage and Champlain Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Mid Cap and Baron Durable 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 Durable Advantage are associated (or correlated) with Champlain Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Mid Cap has no effect on the direction of Baron Durable i.e., Baron Durable and Champlain Mid go up and down completely randomly.

Pair Corralation between Baron Durable and Champlain Mid

Assuming the 90 days horizon Baron Durable Advantage is expected to generate 1.22 times more return on investment than Champlain Mid. However, Baron Durable is 1.22 times more volatile than Champlain Mid Cap. It trades about 0.13 of its potential returns per unit of risk. Champlain Mid Cap is currently generating about 0.1 per unit of risk. If you would invest  2,942  in Baron Durable Advantage on October 25, 2024 and sell it today you would earn a total of  70.00  from holding Baron Durable Advantage or generate 2.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Baron Durable Advantage  vs.  Champlain Mid Cap

Baron Durable Advantage

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Durable Advantage are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baron Durable may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Champlain Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champlain Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Champlain Mid 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 Durable and Champlain Mid

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

The idea behind Baron Durable Advantage and Champlain Mid 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.