Correlation Between Baron Real and Gmo Us

Can any of the company-specific risk be diversified away by investing in both Baron Real and Gmo Us 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 Gmo Us 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 Gmo Opportunistic Value, you can compare the effects of market volatilities on Baron Real and Gmo Us 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 Gmo Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Real and Gmo Us.

Diversification Opportunities for Baron Real and Gmo Us

0.68

Correlation Coefficient

Baron Real  Gmo Us

Poor diversification

The 3 months correlation between Baron and Gmo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Baron Real Estate and Gmo Opportunistic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Opportunistic Value 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 Gmo Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Opportunistic Value has no effect on the direction of Baron Real i.e., Baron Real and Gmo Us go up and down completely randomly.

Pair Corralation between Baron Real and Gmo Us

Assuming the 90 days horizon Baron Real Estate is expected to under-perform the Gmo Us. In addition to that, Baron Real is 1.51 times more volatile than Gmo Opportunistic Value. It trades about -0.25 of its total potential returns per unit of risk. Gmo Opportunistic Value is currently generating about -0.21 per unit of volatility. If you would invest  2,244  in Gmo Opportunistic Value on October 9, 2024 and sell it today you would lose (78.00) from holding Gmo Opportunistic Value or give up 3.48% of portfolio value over 90 days.

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

Baron Real Estate  vs.  Gmo Opportunistic Value

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.

Gmo Opportunistic Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Opportunistic Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking 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 Gmo Us

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

The idea behind Baron Real Estate and Gmo Opportunistic Value 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.