Correlation Between Growth Portfolio and Baron Global

Can any of the company-specific risk be diversified away by investing in both Growth 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 Growth 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 Growth Portfolio Class and Baron Global Advantage, you can compare the effects of market volatilities on Growth 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 Growth Portfolio with a short position of Baron Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Portfolio and Baron Global.

Diversification Opportunities for Growth Portfolio and Baron Global

0.97

Correlation Coefficient

Growth Portfolio  Baron Global

Almost no diversification

The 3 months correlation between Growth and Baron is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Growth Portfolio Class 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 Growth 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 Growth Portfolio Class 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 Growth Portfolio i.e., Growth Portfolio and Baron Global go up and down completely randomly.

Pair Corralation between Growth Portfolio and Baron Global

Assuming the 90 days horizon Growth Portfolio Class is expected to generate 1.28 times more return on investment than Baron Global. However, Growth Portfolio is 1.28 times more volatile than Baron Global Advantage. It trades about 0.12 of its potential returns per unit of risk. Baron Global Advantage is currently generating about 0.09 per unit of risk. If you would invest  3,259  in Growth Portfolio Class on September 4, 2024 and sell it today you would earn a total of  1,993  from holding Growth Portfolio Class or generate 61.15% return on investment over 90 days.

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

Growth Portfolio Class  vs.  Baron Global Advantage

Growth Portfolio Class

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Portfolio Class are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Growth Portfolio 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 Growth Portfolio and Baron Global

The main advantage of trading using opposite Growth Portfolio and Baron Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth 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 Growth Portfolio Class 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.