Correlation Between Baron Global and Virtus Kar

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

Diversification Opportunities for Baron Global and Virtus Kar

0.68

Correlation Coefficient

Baron Global  Virtus Kar

Poor diversification

The 3 months correlation between Baron and Virtus is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Baron Global Advantage and Virtus Kar Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Mid 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Mid has no effect on the direction of Baron Global i.e., Baron Global and Virtus Kar go up and down completely randomly.

Pair Corralation between Baron Global and Virtus Kar

Assuming the 90 days horizon Baron Global Advantage is expected to generate 1.26 times more return on investment than Virtus Kar. However, Baron Global is 1.26 times more volatile than Virtus Kar Mid Cap. It trades about 0.06 of its potential returns per unit of risk. Virtus Kar Mid Cap is currently generating about 0.04 per unit of risk. If you would invest  2,555  in Baron Global Advantage on October 4, 2024 and sell it today you would earn a total of  1,316  from holding Baron Global Advantage or generate 51.51% return on investment over 90 days.

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

Baron Global Advantage  vs.  Virtus Kar Mid Cap

Baron Global Advantage

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Global Advantage are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Baron Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Virtus Kar Mid

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Baron Global and Virtus Kar

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

The idea behind Baron Global Advantage and Virtus Kar Mid Cap 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.

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.