Correlation Between Baron International and Blackrock Intl

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

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

Diversification Opportunities for Baron International and Blackrock Intl

0.83

Correlation Coefficient

Baron International  Blackrock Intl

Very poor diversification

The 3 months correlation between Baron and Blackrock is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Baron International Growth and Blackrock Intl A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Intl A and Baron International 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 International Growth are associated (or correlated) with Blackrock Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Intl A has no effect on the direction of Baron International i.e., Baron International and Blackrock Intl go up and down completely randomly.

Pair Corralation between Baron International and Blackrock Intl

Assuming the 90 days horizon Baron International is expected to generate 1.7 times less return on investment than Blackrock Intl. But when comparing it to its historical volatility, Baron International Growth is 1.08 times less risky than Blackrock Intl. It trades about 0.02 of its potential returns per unit of risk. Blackrock Intl A is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,761  in Blackrock Intl A on October 26, 2024 and sell it today you would earn a total of  237.00  from holding Blackrock Intl A or generate 13.46% return on investment over 90 days.

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

Baron International Growth  vs.  Blackrock Intl A

Baron International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Intl A

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Intl A are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Blackrock Intl 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 International and Blackrock Intl

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

The idea behind Baron International Growth and Blackrock Intl A 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.