Correlation Between Mid Cap and Baron Focused
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Baron Focused 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 Mid Cap and Baron Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth and Baron Focused Growth, you can compare the effects of market volatilities on Mid Cap and Baron Focused 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 Mid Cap with a short position of Baron Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Baron Focused.
Diversification Opportunities for Mid Cap and Baron Focused
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and Baron is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Baron Focused Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Focused Growth and Mid Cap 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 Mid Cap Growth are associated (or correlated) with Baron Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Focused Growth has no effect on the direction of Mid Cap i.e., Mid Cap and Baron Focused go up and down completely randomly.
Pair Corralation between Mid Cap and Baron Focused
Assuming the 90 days horizon Mid Cap Growth is expected to generate 1.67 times more return on investment than Baron Focused. However, Mid Cap is 1.67 times more volatile than Baron Focused Growth. It trades about -0.03 of its potential returns per unit of risk. Baron Focused Growth is currently generating about -0.11 per unit of risk. If you would invest 1,498 in Mid Cap Growth on December 27, 2024 and sell it today you would lose (71.00) from holding Mid Cap Growth or give up 4.74% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mid Cap Growth vs. Baron Focused Growth
Performance |
Timeline |
Mid Cap Growth |
Baron Focused Growth |
Mid Cap and Baron Focused Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mid Cap and Baron Focused
The main advantage of trading using opposite Mid Cap and Baron Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Baron Focused 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 Focused will offset losses from the drop in Baron Focused's long position.Mid Cap vs. Emerging Markets Equity | Mid Cap vs. Global Fixed Income | Mid Cap vs. Global Fixed Income | Mid Cap vs. Global Fixed Income |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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