Correlation Between Tfa Alphagen and Baron Durable

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

By analyzing existing cross correlation between Tfa Alphagen Growth and Baron Durable Advantage, you can compare the effects of market volatilities on Tfa Alphagen and Baron Durable 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 Tfa Alphagen with a short position of Baron Durable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tfa Alphagen and Baron Durable.

Diversification Opportunities for Tfa Alphagen and Baron Durable

0.85

Correlation Coefficient

Tfa Alphagen  Baron Durable

Very poor diversification

The 3 months correlation between Tfa and Baron is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Tfa Alphagen Growth and Baron Durable Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Durable Advantage and Tfa Alphagen 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 Tfa Alphagen Growth are associated (or correlated) with Baron Durable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Durable Advantage has no effect on the direction of Tfa Alphagen i.e., Tfa Alphagen and Baron Durable go up and down completely randomly.

Pair Corralation between Tfa Alphagen and Baron Durable

Assuming the 90 days horizon Tfa Alphagen Growth is expected to generate 1.05 times more return on investment than Baron Durable. However, Tfa Alphagen is 1.05 times more volatile than Baron Durable Advantage. It trades about -0.05 of its potential returns per unit of risk. Baron Durable Advantage is currently generating about -0.06 per unit of risk. If you would invest  1,096  in Tfa Alphagen Growth on December 19, 2024 and sell it today you would lose (46.00) from holding Tfa Alphagen Growth or give up 4.2% of portfolio value over 90 days.

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

Tfa Alphagen Growth  vs.  Baron Durable Advantage

Tfa Alphagen Growth

Risk-Adjusted Performance

Very Weak

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

Baron Durable Advantage

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Tfa Alphagen and Baron Durable

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

The idea behind Tfa Alphagen Growth and Baron Durable Advantage 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.