Correlation Between Baron Durable and Baron Fintech

Can any of the company-specific risk be diversified away by investing in both Baron Durable 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 Durable 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 Durable Advantage and Baron Fintech, you can compare the effects of market volatilities on Baron Durable 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 Durable with a short position of Baron Fintech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Durable and Baron Fintech.

Diversification Opportunities for Baron Durable and Baron Fintech

0.82

Correlation Coefficient

Baron Durable  Baron Fintech

Very poor diversification

The 3 months correlation between Baron and Baron is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Baron Durable Advantage and Baron Fintech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Fintech and Baron Durable 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 Durable Advantage 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 Durable i.e., Baron Durable and Baron Fintech go up and down completely randomly.

Pair Corralation between Baron Durable and Baron Fintech

Assuming the 90 days horizon Baron Durable Advantage is expected to generate 1.07 times more return on investment than Baron Fintech. However, Baron Durable is 1.07 times more volatile than Baron Fintech. It trades about 0.12 of its potential returns per unit of risk. Baron Fintech is currently generating about -0.18 per unit of risk. If you would invest  2,872  in Baron Durable Advantage on September 28, 2024 and sell it today you would earn a total of  70.00  from holding Baron Durable Advantage or generate 2.44% return on investment over 90 days.

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

Baron Durable Advantage  vs.  Baron Fintech

Baron Durable Advantage

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Durable Advantage are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Baron Durable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 Durable and Baron Fintech

The main advantage of trading using opposite Baron Durable and Baron Fintech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Durable 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 Durable Advantage 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.