Correlation Between William Blair and Baron Emerging

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

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

Diversification Opportunities for William Blair and Baron Emerging

0.31

Correlation Coefficient

William Blair  Baron Emerging

Weak diversification

The 3 months correlation between William and Baron is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Emerging and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets and William Blair 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 William Blair Emerging are associated (or correlated) with Baron Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of William Blair i.e., William Blair and Baron Emerging go up and down completely randomly.

Pair Corralation between William Blair and Baron Emerging

Assuming the 90 days horizon William Blair Emerging is expected to under-perform the Baron Emerging. In addition to that, William Blair is 1.19 times more volatile than Baron Emerging Markets. It trades about -0.1 of its total potential returns per unit of risk. Baron Emerging Markets is currently generating about 0.04 per unit of volatility. If you would invest  1,497  in Baron Emerging Markets on December 2, 2024 and sell it today you would earn a total of  18.00  from holding Baron Emerging Markets or generate 1.2% return on investment over 90 days.

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

William Blair Emerging  vs.  Baron Emerging Markets

William Blair Emerging

Risk-Adjusted Performance

Very Weak

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

Baron Emerging Markets

Risk-Adjusted Performance

Very Weak

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

Pair Trading with William Blair and Baron Emerging

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

The idea behind William Blair Emerging and Baron Emerging Markets 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.