Correlation Between Baron Health and Pioneer Strategic

Can any of the company-specific risk be diversified away by investing in both Baron Health and Pioneer Strategic 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 Pioneer Strategic 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 Pioneer Strategic Income, you can compare the effects of market volatilities on Baron Health and Pioneer Strategic 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 Pioneer Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Pioneer Strategic.

Diversification Opportunities for Baron Health and Pioneer Strategic

0.7

Correlation Coefficient

Baron Health  Pioneer Strategic

Poor diversification

The 3 months correlation between Baron and Pioneer is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Pioneer Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Strategic Income 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 Pioneer Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Strategic Income has no effect on the direction of Baron Health i.e., Baron Health and Pioneer Strategic go up and down completely randomly.

Pair Corralation between Baron Health and Pioneer Strategic

Assuming the 90 days horizon Baron Health Care is expected to generate 2.3 times more return on investment than Pioneer Strategic. However, Baron Health is 2.3 times more volatile than Pioneer Strategic Income. It trades about 0.06 of its potential returns per unit of risk. Pioneer Strategic Income is currently generating about 0.1 per unit of risk. If you would invest  1,828  in Baron Health Care on September 4, 2024 and sell it today you would earn a total of  232.00  from holding Baron Health Care or generate 12.69% 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.  Pioneer Strategic Income

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 fairly strong technical indicators, Baron Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pioneer Strategic Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pioneer Strategic Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pioneer Strategic 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 Pioneer Strategic

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

The idea behind Baron Health Care and Pioneer Strategic Income 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.