Correlation Between Baron Emerging and The Hartford

Can any of the company-specific risk be diversified away by investing in both Baron Emerging and The Hartford 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 The Hartford 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 The Hartford Midcap, you can compare the effects of market volatilities on Baron Emerging and The Hartford 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 The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Emerging and The Hartford.

Diversification Opportunities for Baron Emerging and The Hartford

0.17

Correlation Coefficient

Baron Emerging  The Hartford

Average diversification

The 3 months correlation between Baron and The is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Baron Emerging Markets and The Hartford Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Midcap 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Midcap has no effect on the direction of Baron Emerging i.e., Baron Emerging and The Hartford go up and down completely randomly.

Pair Corralation between Baron Emerging and The Hartford

Assuming the 90 days horizon Baron Emerging Markets is expected to under-perform the The Hartford. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baron Emerging Markets is 1.17 times less risky than The Hartford. The mutual fund trades about -0.15 of its potential returns per unit of risk. The The Hartford Midcap is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,844  in The Hartford Midcap on August 31, 2024 and sell it today you would earn a total of  215.00  from holding The Hartford Midcap or generate 7.56% return on investment over 90 days.

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

Baron Emerging Markets  vs.  The Hartford Midcap

Baron Emerging Markets

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Emerging Markets are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Baron Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Midcap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Midcap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, The Hartford may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Baron Emerging and The Hartford

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

The idea behind Baron Emerging Markets and The Hartford Midcap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.