Correlation Between Mid-cap 15x and Baron Real

Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x 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 Mid-cap 15x and Baron Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap 15x Strategy and Baron Real Estate, you can compare the effects of market volatilities on Mid-cap 15x 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 Mid-cap 15x with a short position of Baron Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Baron Real.

Diversification Opportunities for Mid-cap 15x and Baron Real

0.86

Correlation Coefficient

Mid-cap 15x  Baron Real

Very poor diversification

The 3 months correlation between Mid-cap and Baron is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x 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 Mid-cap 15x 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 Mid Cap 15x 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 Mid-cap 15x i.e., Mid-cap 15x and Baron Real go up and down completely randomly.

Pair Corralation between Mid-cap 15x and Baron Real

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 1.42 times more return on investment than Baron Real. However, Mid-cap 15x is 1.42 times more volatile than Baron Real Estate. It trades about 0.08 of its potential returns per unit of risk. Baron Real Estate is currently generating about 0.01 per unit of risk. If you would invest  13,328  in Mid Cap 15x Strategy on October 24, 2024 and sell it today you would earn a total of  965.00  from holding Mid Cap 15x Strategy or generate 7.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Mid Cap 15x Strategy  vs.  Baron Real Estate

Mid Cap 15x

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Mid-cap 15x may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Baron Real Estate

Risk-Adjusted Performance

0 of 100

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 Mid-cap 15x and Baron Real

The main advantage of trading using opposite Mid-cap 15x and Baron Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x 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 Mid Cap 15x 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.