Correlation Between Oakmark Fund and Baron Growth

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

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

Diversification Opportunities for Oakmark Fund and Baron Growth

0.59

Correlation Coefficient

Oakmark Fund  Baron Growth

Very weak diversification

The 3 months correlation between Oakmark and Baron is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Fund Investor and Baron Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Growth and Oakmark Fund 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 Oakmark Fund Investor are associated (or correlated) with Baron Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Growth has no effect on the direction of Oakmark Fund i.e., Oakmark Fund and Baron Growth go up and down completely randomly.

Pair Corralation between Oakmark Fund and Baron Growth

Assuming the 90 days horizon Oakmark Fund Investor is expected to generate 0.88 times more return on investment than Baron Growth. However, Oakmark Fund Investor is 1.14 times less risky than Baron Growth. It trades about 0.05 of its potential returns per unit of risk. Baron Growth Fund is currently generating about -0.08 per unit of risk. If you would invest  15,175  in Oakmark Fund Investor on December 29, 2024 and sell it today you would earn a total of  347.00  from holding Oakmark Fund Investor or generate 2.29% return on investment over 90 days.

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

Oakmark Fund Investor  vs.  Baron Growth Fund

Oakmark Fund Investor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Fund Investor are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Oakmark Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baron Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Baron Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oakmark Fund and Baron Growth

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

The idea behind Oakmark Fund Investor and Baron Growth Fund 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.