Correlation Between Global Opportunity and Baron Global

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

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

Diversification Opportunities for Global Opportunity and Baron Global

0.93

Correlation Coefficient

Global Opportunity  Baron Global

Almost no diversification

The 3 months correlation between Global and Baron is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global Opportunity Portfolio 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 Global Opportunity 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 Global Opportunity Portfolio 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 Global Opportunity i.e., Global Opportunity and Baron Global go up and down completely randomly.

Pair Corralation between Global Opportunity and Baron Global

Assuming the 90 days horizon Global Opportunity is expected to generate 1.06 times less return on investment than Baron Global. But when comparing it to its historical volatility, Global Opportunity Portfolio is 1.27 times less risky than Baron Global. It trades about 0.11 of its potential returns per unit of risk. Baron Global Advantage is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,939  in Baron Global Advantage on September 4, 2024 and sell it today you would earn a total of  959.00  from holding Baron Global Advantage or generate 32.63% return on investment over 90 days.

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

Global Opportunity Portfolio  vs.  Baron Global Advantage

Global Opportunity

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Opportunity Portfolio are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Opportunity showed solid returns over the last few months and may actually be approaching a breakup point.

Baron Global Advantage

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Global Advantage are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Baron Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Opportunity and Baron Global

The main advantage of trading using opposite Global Opportunity and Baron Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Opportunity 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 Global Opportunity Portfolio 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.