Correlation Between Versatile Bond and Baron Select

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

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

Diversification Opportunities for Versatile Bond and Baron Select

-0.63

Correlation Coefficient

Versatile Bond  Baron Select

Excellent diversification

The 3 months correlation between Versatile and Baron is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Baron Select Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Select Funds and Versatile Bond 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 Versatile Bond Portfolio are associated (or correlated) with Baron Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Select Funds has no effect on the direction of Versatile Bond i.e., Versatile Bond and Baron Select go up and down completely randomly.

Pair Corralation between Versatile Bond and Baron Select

Assuming the 90 days horizon Versatile Bond Portfolio is expected to generate 0.06 times more return on investment than Baron Select. However, Versatile Bond Portfolio is 15.64 times less risky than Baron Select. It trades about 0.22 of its potential returns per unit of risk. Baron Select Funds is currently generating about -0.1 per unit of risk. If you would invest  6,383  in Versatile Bond Portfolio on December 22, 2024 and sell it today you would earn a total of  111.00  from holding Versatile Bond Portfolio or generate 1.74% return on investment over 90 days.

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

Versatile Bond Portfolio  vs.  Baron Select Funds

Versatile Bond Portfolio

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Versatile Bond Portfolio are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Versatile Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baron Select Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Select Funds 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Versatile Bond and Baron Select

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

The idea behind Versatile Bond Portfolio and Baron Select Funds 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.