Correlation Between Baron Asset and Baron Fintech

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

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

Diversification Opportunities for Baron Asset and Baron Fintech

0.34

Correlation Coefficient

Baron Asset  Baron Fintech

Weak diversification

The 3 months correlation between Baron and Baron is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Baron Asset Fund and Baron Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Fintech and Baron Asset 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 Baron Asset Fund 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 Baron Asset i.e., Baron Asset and Baron Fintech go up and down completely randomly.

Pair Corralation between Baron Asset and Baron Fintech

Assuming the 90 days horizon Baron Asset Fund is expected to under-perform the Baron Fintech. In addition to that, Baron Asset is 3.45 times more volatile than Baron Fintech. It trades about -0.25 of its total potential returns per unit of risk. Baron Fintech is currently generating about -0.18 per unit of volatility. If you would invest  1,864  in Baron Fintech on September 28, 2024 and sell it today you would lose (71.00) from holding Baron Fintech or give up 3.81% of portfolio value over 90 days.

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

Baron Asset Fund  vs.  Baron Fintech

Baron Asset Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Asset Fund 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 basic 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 Fintech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Fintech are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baron Fintech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Baron Asset and Baron Fintech

The main advantage of trading using opposite Baron Asset and Baron Fintech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Asset 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 Baron Asset Fund 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.