Correlation Between Nasdaq and Baron Intl

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

By analyzing existing cross correlation between Nasdaq Inc and Baron Intl Growth, you can compare the effects of market volatilities on Nasdaq and Baron Intl 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 Nasdaq with a short position of Baron Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Baron Intl.

Diversification Opportunities for Nasdaq and Baron Intl

-0.7

Correlation Coefficient

Nasdaq  Baron Intl

Excellent diversification

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

Pair Corralation between Nasdaq and Baron Intl

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.41 times more return on investment than Baron Intl. However, Nasdaq is 1.41 times more volatile than Baron Intl Growth. It trades about 0.19 of its potential returns per unit of risk. Baron Intl Growth is currently generating about 0.02 per unit of risk. If you would invest  5,911  in Nasdaq Inc on September 29, 2024 and sell it today you would earn a total of  1,931  from holding Nasdaq Inc or generate 32.67% return on investment over 90 days.

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

Nasdaq Inc  vs.  Baron Intl Growth

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Baron Intl Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Intl Growth 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.

Pair Trading with Nasdaq and Baron Intl

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

The idea behind Nasdaq Inc and Baron Intl Growth 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.