Correlation Between Baron Growth and Ultramid Cap

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

Diversification Opportunities for Baron Growth and Ultramid Cap

0.68

Correlation Coefficient

Baron Growth  Ultramid Cap

Poor diversification

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

Pair Corralation between Baron Growth and Ultramid Cap

Assuming the 90 days horizon Baron Growth Fund is expected to generate 0.46 times more return on investment than Ultramid Cap. However, Baron Growth Fund is 2.2 times less risky than Ultramid Cap. It trades about -0.08 of its potential returns per unit of risk. Ultramid Cap Profund Ultramid Cap is currently generating about -0.1 per unit of risk. If you would invest  9,584  in Baron Growth Fund on December 21, 2024 and sell it today you would lose (427.00) from holding Baron Growth Fund or give up 4.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Baron Growth Fund  vs.  Ultramid Cap Profund Ultramid

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

Ultramid Cap Profund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultramid Cap Profund Ultramid Cap 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 forward 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 Ultramid Cap

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

The idea behind Baron Growth Fund and Ultramid Cap Profund Ultramid 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.