Correlation Between Materials Portfolio and Baron Global

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

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

Diversification Opportunities for Materials Portfolio and Baron Global

-0.1

Correlation Coefficient

Materials Portfolio  Baron Global

Good diversification

The 3 months correlation between Materials and Baron is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Materials Portfolio Fidelity and Baron Global Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Global Advantage and Materials Portfolio 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 Materials Portfolio Fidelity are associated (or correlated) with Baron Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Global Advantage has no effect on the direction of Materials Portfolio i.e., Materials Portfolio and Baron Global go up and down completely randomly.

Pair Corralation between Materials Portfolio and Baron Global

Assuming the 90 days horizon Materials Portfolio Fidelity is expected to under-perform the Baron Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Materials Portfolio Fidelity is 1.2 times less risky than Baron Global. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Baron Global Advantage is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,000  in Baron Global Advantage on November 29, 2024 and sell it today you would earn a total of  109.00  from holding Baron Global Advantage or generate 2.73% return on investment over 90 days.

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

Materials Portfolio Fidelity  vs.  Baron Global Advantage

Materials Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Materials Portfolio Fidelity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Baron Global Advantage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Global Advantage are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Baron Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Materials Portfolio and Baron Global

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

The idea behind Materials Portfolio Fidelity and Baron Global Advantage 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.