Correlation Between Baron Growth and Oakmark Fund

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

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

Diversification Opportunities for Baron Growth and Oakmark Fund

0.76

Correlation Coefficient

Baron Growth  Oakmark Fund

Poor diversification

The 3 months correlation between Baron and Oakmark is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Baron Growth Fund and Oakmark Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Fund Investor and Baron Growth 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 Growth Fund are associated (or correlated) with Oakmark Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Fund Investor has no effect on the direction of Baron Growth i.e., Baron Growth and Oakmark Fund go up and down completely randomly.

Pair Corralation between Baron Growth and Oakmark Fund

Assuming the 90 days horizon Baron Growth is expected to generate 1.45 times less return on investment than Oakmark Fund. But when comparing it to its historical volatility, Baron Growth Fund is 1.02 times less risky than Oakmark Fund. It trades about 0.12 of its potential returns per unit of risk. Oakmark Fund Investor is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  14,897  in Oakmark Fund Investor on September 3, 2024 and sell it today you would earn a total of  1,376  from holding Oakmark Fund Investor or generate 9.24% return on investment over 90 days.

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

Baron Growth Fund  vs.  Oakmark Fund Investor

Baron Growth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Growth Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Baron Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oakmark Fund Investor

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Fund Investor are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Oakmark Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Baron Growth and Oakmark Fund

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

The idea behind Baron Growth Fund and Oakmark Fund Investor 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.