Correlation Between Baron Global and Baron Health
Can any of the company-specific risk be diversified away by investing in both Baron Global and Baron Health 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 Baron Health 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 Baron Health Care, you can compare the effects of market volatilities on Baron Global and Baron Health 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 Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Global and Baron Health.
Diversification Opportunities for Baron Global and Baron Health
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Baron is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Baron Global Advantage and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care 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 Baron Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Baron Global i.e., Baron Global and Baron Health go up and down completely randomly.
Pair Corralation between Baron Global and Baron Health
Assuming the 90 days horizon Baron Global Advantage is expected to under-perform the Baron Health. In addition to that, Baron Global is 1.81 times more volatile than Baron Health Care. It trades about -0.06 of its total potential returns per unit of risk. Baron Health Care is currently generating about -0.03 per unit of volatility. If you would invest 1,930 in Baron Health Care on December 28, 2024 and sell it today you would lose (36.00) from holding Baron Health Care or give up 1.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Baron Global Advantage vs. Baron Health Care
Performance |
Timeline |
Baron Global Advantage |
Baron Health Care |
Baron Global and Baron Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baron Global and Baron Health
The main advantage of trading using opposite Baron Global and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Global position performs unexpectedly, Baron Health 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 Health will offset losses from the drop in Baron Health's long position.Baron Global vs. Baron Opportunity Fund | Baron Global vs. Morgan Stanley Multi | Baron Global vs. Baron Focused Growth | Baron Global vs. Mid Cap Growth |
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Check out your portfolio center.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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