Correlation Between Baron Growth and T Rowe

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

Diversification Opportunities for Baron Growth and T Rowe

0.93

Correlation Coefficient

Baron Growth  T Rowe

Almost no diversification

The 3 months correlation between Baron and RPMGX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Baron Growth Fund and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Baron Growth i.e., Baron Growth and T Rowe go up and down completely randomly.

Pair Corralation between Baron Growth and T Rowe

Assuming the 90 days horizon Baron Growth Fund is expected to under-perform the T Rowe. In addition to that, Baron Growth is 1.16 times more volatile than T Rowe Price. It trades about -0.16 of its total potential returns per unit of risk. T Rowe Price is currently generating about -0.18 per unit of volatility. If you would invest  11,597  in T Rowe Price on December 2, 2024 and sell it today you would lose (1,783) from holding T Rowe Price or give up 15.37% of portfolio value over 90 days.

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

Baron Growth Fund  vs.  T Rowe Price

Baron Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Growth Fund 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

T Rowe Price

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rowe Price 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Baron Growth and T Rowe

The main advantage of trading using opposite Baron Growth and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Growth position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Baron Growth Fund and T Rowe Price 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..