Correlation Between Baron Partners and Nasdaq 100

Can any of the company-specific risk be diversified away by investing in both Baron Partners and Nasdaq 100 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 Partners and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baron Partners Fund and Nasdaq 100 Fund Investor, you can compare the effects of market volatilities on Baron Partners and Nasdaq 100 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 Partners with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Partners and Nasdaq 100.

Diversification Opportunities for Baron Partners and Nasdaq 100

0.84

Correlation Coefficient

Baron Partners  Nasdaq 100

Very poor diversification

The 3 months correlation between Baron and Nasdaq is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Baron Partners Fund and Nasdaq 100 Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund and Baron Partners 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 Partners Fund are associated (or correlated) with Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Fund has no effect on the direction of Baron Partners i.e., Baron Partners and Nasdaq 100 go up and down completely randomly.

Pair Corralation between Baron Partners and Nasdaq 100

Assuming the 90 days horizon Baron Partners Fund is expected to generate 1.51 times more return on investment than Nasdaq 100. However, Baron Partners is 1.51 times more volatile than Nasdaq 100 Fund Investor. It trades about 0.06 of its potential returns per unit of risk. Nasdaq 100 Fund Investor is currently generating about 0.09 per unit of risk. If you would invest  16,036  in Baron Partners Fund on September 13, 2024 and sell it today you would earn a total of  4,134  from holding Baron Partners Fund or generate 25.78% return on investment over 90 days.

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

Baron Partners Fund  vs.  Nasdaq 100 Fund Investor

Baron Partners

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Partners Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baron Partners showed solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq 100 Fund

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Fund Investor are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Nasdaq 100 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Baron Partners and Nasdaq 100

The main advantage of trading using opposite Baron Partners and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Partners position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.

The idea behind Baron Partners Fund and Nasdaq 100 Fund Investor 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.