Correlation Between VHAI and Baron Select

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

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

Diversification Opportunities for VHAI and Baron Select

-0.63

Correlation Coefficient

VHAI  Baron Select

Excellent diversification

The 3 months correlation between VHAI and Baron is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Baron Select Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Select Funds 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 Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Select Funds has no effect on the direction of VHAI i.e., VHAI and Baron Select go up and down completely randomly.

Pair Corralation between VHAI and Baron Select

Given the investment horizon of 90 days VHAI is expected to under-perform the Baron Select. In addition to that, VHAI is 11.21 times more volatile than Baron Select Funds. It trades about -0.16 of its total potential returns per unit of risk. Baron Select Funds is currently generating about 0.28 per unit of volatility. If you would invest  1,063  in Baron Select Funds on August 31, 2024 and sell it today you would earn a total of  253.00  from holding Baron Select Funds or generate 23.8% return on investment over 90 days.

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

VHAI  vs.  Baron Select Funds

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Baron Select Funds

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Select Funds are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Baron Select showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VHAI and Baron Select

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

The idea behind VHAI and Baron Select Funds 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.