Correlation Between Baron Global and Atac Inflation

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

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

Diversification Opportunities for Baron Global and Atac Inflation

-0.31

Correlation Coefficient

Baron Global  Atac Inflation

Very good diversification

The 3 months correlation between Baron and Atac is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Baron Global Advantage and Atac Inflation Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atac Inflation Rotation and Baron Global 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 Global Advantage are associated (or correlated) with Atac Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atac Inflation Rotation has no effect on the direction of Baron Global i.e., Baron Global and Atac Inflation go up and down completely randomly.

Pair Corralation between Baron Global and Atac Inflation

Assuming the 90 days horizon Baron Global Advantage is expected to generate 1.79 times more return on investment than Atac Inflation. However, Baron Global is 1.79 times more volatile than Atac Inflation Rotation. It trades about -0.01 of its potential returns per unit of risk. Atac Inflation Rotation is currently generating about -0.05 per unit of risk. If you would invest  3,871  in Baron Global Advantage on December 3, 2024 and sell it today you would lose (49.00) from holding Baron Global Advantage or give up 1.27% of portfolio value over 90 days.

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

Baron Global Advantage  vs.  Atac Inflation Rotation

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 fairly strong technical and fundamental indicators, Baron Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Atac Inflation Rotation

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Baron Global and Atac Inflation

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

The idea behind Baron Global Advantage and Atac Inflation Rotation 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.