Correlation Between Baron Emerging and International Value

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

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

Diversification Opportunities for Baron Emerging and International Value

0.82

Correlation Coefficient

Baron Emerging  International Value

Very poor diversification

The 3 months correlation between BARON and International is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Baron Emerging Markets and International Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Value and Baron Emerging 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 Emerging Markets are associated (or correlated) with International Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Value has no effect on the direction of Baron Emerging i.e., Baron Emerging and International Value go up and down completely randomly.

Pair Corralation between Baron Emerging and International Value

Assuming the 90 days horizon Baron Emerging is expected to generate 3.62 times less return on investment than International Value. In addition to that, Baron Emerging is 1.31 times more volatile than International Value Fund. It trades about 0.06 of its total potential returns per unit of risk. International Value Fund is currently generating about 0.29 per unit of volatility. If you would invest  835.00  in International Value Fund on December 22, 2024 and sell it today you would earn a total of  132.00  from holding International Value Fund or generate 15.81% return on investment over 90 days.

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

Baron Emerging Markets  vs.  International Value Fund

Baron Emerging Markets

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Baron Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International Value

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Value Fund are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, International Value showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baron Emerging and International Value

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

The idea behind Baron Emerging Markets and International Value 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.