Correlation Between Baron Fifth and Brown Advisory

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

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

Diversification Opportunities for Baron Fifth and Brown Advisory

-0.29

Correlation Coefficient

Baron Fifth  Brown Advisory

Very good diversification

The 3 months correlation between Baron and Brown is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Baron Fifth Avenue and Brown Advisory Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Advisory Growth and Baron Fifth 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 Fifth Avenue are associated (or correlated) with Brown Advisory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Advisory Growth has no effect on the direction of Baron Fifth i.e., Baron Fifth and Brown Advisory go up and down completely randomly.

Pair Corralation between Baron Fifth and Brown Advisory

Assuming the 90 days horizon Baron Fifth Avenue is expected to generate 0.14 times more return on investment than Brown Advisory. However, Baron Fifth Avenue is 7.2 times less risky than Brown Advisory. It trades about -0.01 of its potential returns per unit of risk. Brown Advisory Growth is currently generating about -0.24 per unit of risk. If you would invest  6,047  in Baron Fifth Avenue on October 9, 2024 and sell it today you would lose (25.00) from holding Baron Fifth Avenue or give up 0.41% of portfolio value over 90 days.

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

Baron Fifth Avenue  vs.  Brown Advisory Growth

Baron Fifth Avenue

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Fifth Avenue are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Baron Fifth showed solid returns over the last few months and may actually be approaching a breakup point.

Brown Advisory Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brown Advisory Growth 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.

Pair Trading with Baron Fifth and Brown Advisory

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

The idea behind Baron Fifth Avenue and Brown Advisory 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.