Correlation Between Capital Financial and Baron Capital

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

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

Diversification Opportunities for Capital Financial and Baron Capital

0.0

Correlation Coefficient

Capital Financial  Baron Capital

Pay attention - limited upside

The 3 months correlation between Capital and Baron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Capital Financial Gl and Baron Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Capital and Capital Financial 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 Capital Financial Gl are associated (or correlated) with Baron Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Capital has no effect on the direction of Capital Financial i.e., Capital Financial and Baron Capital go up and down completely randomly.

Pair Corralation between Capital Financial and Baron Capital

If you would invest  0.03  in Baron Capital on December 1, 2024 and sell it today you would lose (0.02) from holding Baron Capital or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Capital Financial Gl  vs.  Baron Capital

Capital Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Financial Gl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Capital Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Baron Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Baron Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Financial and Baron Capital

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

The idea behind Capital Financial Gl and Baron Capital 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.