Correlation Between Sunlight Financial and Baron Capital

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

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

Diversification Opportunities for Sunlight Financial and Baron Capital

0.0

Correlation Coefficient

Sunlight Financial  Baron Capital

Pay attention - limited upside

The 3 months correlation between Sunlight and Baron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sunlight Financial Holdings and Baron Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Capital and Sunlight Financial 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 Sunlight Financial Holdings are associated (or correlated) with Baron Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Capital has no effect on the direction of Sunlight Financial i.e., Sunlight Financial and Baron Capital go up and down completely randomly.

Pair Corralation between Sunlight Financial and Baron Capital

If you would invest  0.01  in Baron Capital on December 29, 2024 and sell it today you would earn a total of  0.01  from holding Baron Capital or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sunlight Financial Holdings  vs.  Baron Capital

Sunlight Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunlight Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sunlight Financial is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Baron Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Baron Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunlight Financial and Baron Capital

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

The idea behind Sunlight Financial Holdings and Baron Capital 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.