Correlation Between Nasdaq-100(r) and Baron Real

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Baron Real 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 Nasdaq-100(r) and Baron Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Baron Real Estate, you can compare the effects of market volatilities on Nasdaq-100(r) and Baron Real 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 Nasdaq-100(r) with a short position of Baron Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Baron Real.

Diversification Opportunities for Nasdaq-100(r) and Baron Real

0.31

Correlation Coefficient

Nasdaq-100(r)  Baron Real

Weak diversification

The 3 months correlation between Nasdaq-100(r) and Baron is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Baron Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Real Estate and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Baron Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Real Estate has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Baron Real go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Baron Real

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Baron Real. In addition to that, Nasdaq-100(r) is 2.49 times more volatile than Baron Real Estate. It trades about -0.12 of its total potential returns per unit of risk. Baron Real Estate is currently generating about -0.03 per unit of volatility. If you would invest  1,656  in Baron Real Estate on December 24, 2024 and sell it today you would lose (34.00) from holding Baron Real Estate or give up 2.05% of portfolio value over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Baron Real Estate

Nasdaq 100 2x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq 100 2x Strategy 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 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.

Baron Real Estate

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nasdaq-100(r) and Baron Real

The main advantage of trading using opposite Nasdaq-100(r) and Baron Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Baron Real 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 Real will offset losses from the drop in Baron Real's long position.

The idea behind Nasdaq 100 2x Strategy and Baron Real Estate 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 Anywhere module to track or share privately all of your investments from the convenience of any device.