Correlation Between Baron Global and Amer Beacon

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

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

Diversification Opportunities for Baron Global and Amer Beacon

0.94

Correlation Coefficient

Baron Global  Amer Beacon

Almost no diversification

The 3 months correlation between Baron and Amer is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Baron Global Advantage and Amer Beacon Ark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Ark and Baron Global 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 Global Advantage are associated (or correlated) with Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Ark has no effect on the direction of Baron Global i.e., Baron Global and Amer Beacon go up and down completely randomly.

Pair Corralation between Baron Global and Amer Beacon

Assuming the 90 days horizon Baron Global is expected to generate 2.42 times less return on investment than Amer Beacon. But when comparing it to its historical volatility, Baron Global Advantage is 2.5 times less risky than Amer Beacon. It trades about 0.41 of its potential returns per unit of risk. Amer Beacon Ark is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  1,252  in Amer Beacon Ark on September 5, 2024 and sell it today you would earn a total of  327.00  from holding Amer Beacon Ark or generate 26.12% return on investment over 90 days.

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

Baron Global Advantage  vs.  Amer Beacon Ark

Baron Global Advantage

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Global Advantage are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Baron Global showed solid returns over the last few months and may actually be approaching a breakup point.

Amer Beacon Ark

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Beacon Ark are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amer Beacon showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baron Global and Amer Beacon

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

The idea behind Baron Global Advantage and Amer Beacon Ark 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.