Correlation Between Baron Health and Amg Managers

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

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

Diversification Opportunities for Baron Health and Amg Managers

0.77

Correlation Coefficient

Baron Health  Amg Managers

Poor diversification

The 3 months correlation between Baron and Amg is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Amg Managers Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Special and Baron Health 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 Health Care are associated (or correlated) with Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Special has no effect on the direction of Baron Health i.e., Baron Health and Amg Managers go up and down completely randomly.

Pair Corralation between Baron Health and Amg Managers

Assuming the 90 days horizon Baron Health is expected to generate 1.92 times less return on investment than Amg Managers. But when comparing it to its historical volatility, Baron Health Care is 1.24 times less risky than Amg Managers. It trades about 0.04 of its potential returns per unit of risk. Amg Managers Special is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,889  in Amg Managers Special on September 28, 2024 and sell it today you would earn a total of  889.00  from holding Amg Managers Special or generate 15.1% return on investment over 90 days.

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

Baron Health Care  vs.  Amg Managers Special

Baron Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Health Care has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Amg Managers Special

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Baron Health and Amg Managers

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

The idea behind Baron Health Care and Amg Managers Special 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.