Correlation Between Baron Fintech and Baron Global

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

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

Diversification Opportunities for Baron Fintech and Baron Global

0.85

Correlation Coefficient

Baron Fintech  Baron Global

Very poor diversification

The 3 months correlation between Baron and Baron is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Baron Fintech and Baron Global Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Global Advantage and Baron Fintech 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 Fintech are associated (or correlated) with Baron Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Global Advantage has no effect on the direction of Baron Fintech i.e., Baron Fintech and Baron Global go up and down completely randomly.

Pair Corralation between Baron Fintech and Baron Global

Assuming the 90 days horizon Baron Fintech is expected to generate 0.71 times more return on investment than Baron Global. However, Baron Fintech is 1.41 times less risky than Baron Global. It trades about 0.0 of its potential returns per unit of risk. Baron Global Advantage is currently generating about -0.08 per unit of risk. If you would invest  1,736  in Baron Fintech on December 28, 2024 and sell it today you would lose (8.00) from holding Baron Fintech or give up 0.46% of portfolio value over 90 days.

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

Baron Fintech  vs.  Baron Global Advantage

Baron Fintech

Risk-Adjusted Performance

Very Weak

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

Baron Global Advantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Global Advantage has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Baron Fintech and Baron Global

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

The idea behind Baron Fintech and Baron Global Advantage 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.