Correlation Between VHAI and Baron Fintech

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

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

Diversification Opportunities for VHAI and Baron Fintech

-0.6

Correlation Coefficient

VHAI  Baron Fintech

Excellent diversification

The 3 months correlation between VHAI and Baron is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Baron Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Fintech and VHAI 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 VHAI are associated (or correlated) with Baron Fintech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Fintech has no effect on the direction of VHAI i.e., VHAI and Baron Fintech go up and down completely randomly.

Pair Corralation between VHAI and Baron Fintech

Given the investment horizon of 90 days VHAI is expected to under-perform the Baron Fintech. In addition to that, VHAI is 16.59 times more volatile than Baron Fintech. It trades about -0.16 of its total potential returns per unit of risk. Baron Fintech is currently generating about 0.26 per unit of volatility. If you would invest  1,588  in Baron Fintech on September 5, 2024 and sell it today you would earn a total of  233.00  from holding Baron Fintech or generate 14.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

VHAI  vs.  Baron Fintech

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Baron Fintech

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Fintech are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baron Fintech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VHAI and Baron Fintech

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

The idea behind VHAI and Baron Fintech 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.