Correlation Between Baron Real and Dfa Real

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

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

Diversification Opportunities for Baron Real and Dfa Real

0.89

Correlation Coefficient

Baron Real  Dfa Real

Very poor diversification

The 3 months correlation between Baron and Dfa is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Baron Real Estate and Dfa Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Real Estate and Baron Real 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 Real Estate are associated (or correlated) with Dfa Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Real Estate has no effect on the direction of Baron Real i.e., Baron Real and Dfa Real go up and down completely randomly.

Pair Corralation between Baron Real and Dfa Real

Assuming the 90 days horizon Baron Real Estate is expected to generate 1.08 times more return on investment than Dfa Real. However, Baron Real is 1.08 times more volatile than Dfa Real Estate. It trades about -0.04 of its potential returns per unit of risk. Dfa Real Estate is currently generating about -0.1 per unit of risk. If you would invest  4,193  in Baron Real Estate on October 26, 2024 and sell it today you would lose (138.00) from holding Baron Real Estate or give up 3.29% of portfolio value over 90 days.

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

Baron Real Estate  vs.  Dfa Real Estate

Baron Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dfa Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dfa Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Baron Real and Dfa Real

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

The idea behind Baron Real Estate and Dfa Real Estate 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 Transaction History module to view history of all your transactions and understand their impact on performance.