Correlation Between Nasdaq-100 Fund and Baron Partners

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

By analyzing existing cross correlation between Nasdaq 100 Fund Investor and Baron Partners Fund, you can compare the effects of market volatilities on Nasdaq-100 Fund and Baron Partners 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 Fund with a short position of Baron Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Fund and Baron Partners.

Diversification Opportunities for Nasdaq-100 Fund and Baron Partners

-0.17

Correlation Coefficient

Nasdaq-100 Fund  Baron Partners

Good diversification

The 3 months correlation between Nasdaq-100 and Baron is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Fund Investor and Baron Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Partners and Nasdaq-100 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 Nasdaq 100 Fund Investor are associated (or correlated) with Baron Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Partners has no effect on the direction of Nasdaq-100 Fund i.e., Nasdaq-100 Fund and Baron Partners go up and down completely randomly.

Pair Corralation between Nasdaq-100 Fund and Baron Partners

Assuming the 90 days horizon Nasdaq 100 Fund Investor is expected to under-perform the Baron Partners. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nasdaq 100 Fund Investor is 1.49 times less risky than Baron Partners. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Baron Partners Fund is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  19,126  in Baron Partners Fund on December 3, 2024 and sell it today you would lose (824.00) from holding Baron Partners Fund or give up 4.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Nasdaq 100 Fund Investor  vs.  Baron Partners Fund

Nasdaq 100 Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq 100 Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Baron Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Partners Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Baron Partners 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 Fund and Baron Partners

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

The idea behind Nasdaq 100 Fund Investor and Baron Partners 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.