Correlation Between Baron Health and Baron Fifth

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

Diversification Opportunities for Baron Health and Baron Fifth

-0.68

Correlation Coefficient

Baron Health  Baron Fifth

Excellent diversification

The 3 months correlation between Baron and Baron is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Baron Fifth Avenue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Fifth Avenue 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 Baron Fifth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Fifth Avenue has no effect on the direction of Baron Health i.e., Baron Health and Baron Fifth go up and down completely randomly.

Pair Corralation between Baron Health and Baron Fifth

Assuming the 90 days horizon Baron Health Care is expected to under-perform the Baron Fifth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baron Health Care is 1.39 times less risky than Baron Fifth. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Baron Fifth Avenue is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  5,344  in Baron Fifth Avenue on September 28, 2024 and sell it today you would earn a total of  818.00  from holding Baron Fifth Avenue or generate 15.31% return on investment over 90 days.

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

Baron Health Care  vs.  Baron Fifth Avenue

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 basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Baron Fifth Avenue

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Fifth Avenue are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baron Fifth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baron Health and Baron Fifth

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

The idea behind Baron Health Care and Baron Fifth Avenue 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.