Correlation Between Twin Ridge and Baron Capital

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

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

Diversification Opportunities for Twin Ridge and Baron Capital

0.0

Correlation Coefficient

Twin Ridge  Baron Capital

Pay attention - limited upside

The 3 months correlation between Twin and Baron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Twin Ridge Capital and Baron Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Capital and Twin Ridge 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 Twin Ridge Capital 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 Twin Ridge i.e., Twin Ridge and Baron Capital go up and down completely randomly.

Pair Corralation between Twin Ridge and Baron Capital

If you would invest  0.01  in Baron Capital on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Baron Capital or generate 0.0% return on investment over 90 days.

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

Twin Ridge Capital  vs.  Baron Capital

Twin Ridge Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Twin Ridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Twin Ridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baron Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Capital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Baron Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Twin Ridge and Baron Capital

The main advantage of trading using opposite Twin Ridge and Baron Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twin Ridge 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 Twin Ridge Capital 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.