Correlation Between Baron Small and VivoPower International

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

By analyzing existing cross correlation between Baron Small Cap and VivoPower International PLC, you can compare the effects of market volatilities on Baron Small and VivoPower International 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 Small with a short position of VivoPower International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Small and VivoPower International.

Diversification Opportunities for Baron Small and VivoPower International

-0.23

Correlation Coefficient

Baron Small  VivoPower International

Very good diversification

The 3 months correlation between Baron and VivoPower is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Baron Small Cap and VivoPower International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VivoPower International and Baron Small 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 Small Cap are associated (or correlated) with VivoPower International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VivoPower International has no effect on the direction of Baron Small i.e., Baron Small and VivoPower International go up and down completely randomly.

Pair Corralation between Baron Small and VivoPower International

Assuming the 90 days horizon Baron Small Cap is expected to under-perform the VivoPower International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baron Small Cap is 6.57 times less risky than VivoPower International. The mutual fund trades about -0.09 of its potential returns per unit of risk. The VivoPower International PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  100.00  in VivoPower International PLC on September 28, 2024 and sell it today you would earn a total of  52.00  from holding VivoPower International PLC or generate 52.0% return on investment over 90 days.

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

Baron Small Cap  vs.  VivoPower International PLC

Baron Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Small Cap 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.

VivoPower International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VivoPower International PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, VivoPower International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baron Small and VivoPower International

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

The idea behind Baron Small Cap and VivoPower International PLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.