Correlation Between Bitcoin and Baron Wealthbuilder

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

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

Diversification Opportunities for Bitcoin and Baron Wealthbuilder

0.84

Correlation Coefficient

Bitcoin  Baron Wealthbuilder

Very poor diversification

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

Pair Corralation between Bitcoin and Baron Wealthbuilder

Assuming the 90 days trading horizon Bitcoin is expected to generate 3.11 times more return on investment than Baron Wealthbuilder. However, Bitcoin is 3.11 times more volatile than Baron Wealthbuilder Fund. It trades about 0.09 of its potential returns per unit of risk. Baron Wealthbuilder Fund is currently generating about 0.12 per unit of risk. If you would invest  6,928,895  in Bitcoin on October 27, 2024 and sell it today you would earn a total of  3,532,105  from holding Bitcoin or generate 50.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	57.98%
Values	Daily Returns

Bitcoin  vs.  Baron Wealthbuilder Fund

Bitcoin

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Baron Wealthbuilder

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Wealthbuilder Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Baron Wealthbuilder may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bitcoin and Baron Wealthbuilder

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

The idea behind Bitcoin and Baron Wealthbuilder Fund 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..