Correlation Between Baron Health and Snow Capital

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

By analyzing existing cross correlation between Baron Health Care and Snow Capital Dividend, you can compare the effects of market volatilities on Baron Health and Snow Capital 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 Health with a short position of Snow Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Snow Capital.

Diversification Opportunities for Baron Health and Snow Capital

0.0

Correlation Coefficient

Baron Health  Snow Capital

Pay attention - limited upside

The 3 months correlation between Baron and Snow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Snow Capital Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Capital Dividend and Baron Health 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 Health Care are associated (or correlated) with Snow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Capital Dividend has no effect on the direction of Baron Health i.e., Baron Health and Snow Capital go up and down completely randomly.

Pair Corralation between Baron Health and Snow Capital

If you would invest (100.00) in Snow Capital Dividend on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Snow Capital Dividend or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Baron Health Care  vs.  Snow Capital Dividend

Baron Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

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

Snow Capital Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Snow Capital Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Snow Capital 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 Health and Snow Capital

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

The idea behind Baron Health Care and Snow Capital Dividend 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.