Correlation Between Brown Advisory and Baron Emerging

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

By analyzing existing cross correlation between Brown Advisory Sustainable and Baron Emerging Markets, you can compare the effects of market volatilities on Brown Advisory and Baron Emerging 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 Brown Advisory with a short position of Baron Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Advisory and Baron Emerging.

Diversification Opportunities for Brown Advisory and Baron Emerging

0.18

Correlation Coefficient

Brown Advisory  Baron Emerging

Average diversification

The 3 months correlation between Brown and Baron is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Brown Advisory Sustainable and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets and Brown Advisory 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 Brown Advisory Sustainable are associated (or correlated) with Baron Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of Brown Advisory i.e., Brown Advisory and Baron Emerging go up and down completely randomly.

Pair Corralation between Brown Advisory and Baron Emerging

Assuming the 90 days horizon Brown Advisory Sustainable is expected to generate 1.17 times more return on investment than Baron Emerging. However, Brown Advisory is 1.17 times more volatile than Baron Emerging Markets. It trades about 0.1 of its potential returns per unit of risk. Baron Emerging Markets is currently generating about 0.07 per unit of risk. If you would invest  4,569  in Brown Advisory Sustainable on September 4, 2024 and sell it today you would earn a total of  1,221  from holding Brown Advisory Sustainable or generate 26.72% return on investment over 90 days.

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

Brown Advisory Sustainable  vs.  Baron Emerging Markets

Brown Advisory Susta

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brown Advisory Sustainable are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Brown Advisory may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Baron Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Baron Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brown Advisory and Baron Emerging

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

The idea behind Brown Advisory Sustainable and Baron Emerging Markets 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.