Correlation Between Ultrashort Mid-cap and Baron Durable

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

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

Diversification Opportunities for Ultrashort Mid-cap and Baron Durable

-0.91

Correlation Coefficient

Ultrashort Mid-cap  Baron Durable

Pay attention - limited upside

The 3 months correlation between Ultrashort and Baron is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ultrashort Mid Cap Profund 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 Ultrashort Mid-cap 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 Ultrashort Mid Cap Profund 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 Ultrashort Mid-cap i.e., Ultrashort Mid-cap and Baron Durable go up and down completely randomly.

Pair Corralation between Ultrashort Mid-cap and Baron Durable

Assuming the 90 days horizon Ultrashort Mid Cap Profund is expected to under-perform the Baron Durable. In addition to that, Ultrashort Mid-cap is 2.16 times more volatile than Baron Durable Advantage. It trades about -0.17 of its total potential returns per unit of risk. Baron Durable Advantage is currently generating about 0.17 per unit of volatility. If you would invest  2,652  in Baron Durable Advantage on September 4, 2024 and sell it today you would earn a total of  255.00  from holding Baron Durable Advantage or generate 9.62% return on investment over 90 days.

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

Ultrashort Mid Cap Profund  vs.  Baron Durable Advantage

Ultrashort Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrashort Mid Cap Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Baron Durable Advantage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Durable Advantage are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Baron Durable may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ultrashort Mid-cap and Baron Durable

The main advantage of trading using opposite Ultrashort Mid-cap and Baron Durable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrashort Mid-cap 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 Ultrashort Mid Cap Profund 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.