Correlation Between Baron Real and International Business

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Can any of the company-specific risk be diversified away by investing in both Baron Real and International Business 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 Real and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Real Estate and International Business Machines, you can compare the effects of market volatilities on Baron Real and International Business 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 Real with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Real and International Business.

Diversification Opportunities for Baron Real and International Business

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Baron and International is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Baron Real Estate and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Baron Real 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 Real Estate are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Baron Real i.e., Baron Real and International Business go up and down completely randomly.

Pair Corralation between Baron Real and International Business

Assuming the 90 days horizon Baron Real Estate is expected to under-perform the International Business. In addition to that, Baron Real is 1.16 times more volatile than International Business Machines. It trades about -0.06 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.04 per unit of volatility. If you would invest  13,778  in International Business Machines on September 1, 2022 and sell it today you would earn a total of  871.00  from holding International Business Machines or generate 6.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.2%
ValuesDaily Returns

Baron Real Estate  vs.  International Business Machine

 Performance (%) 
       Timeline  
Baron Real Estate 
Baron Performance
0 of 100
Over the last 90 days Baron Real Estate 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 Price Channel

International Business 
International Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish fundamental drivers, International Business revealed solid returns over the last few months and may actually be approaching a breakup point.

International Price Channel

Baron Real and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baron Real and International Business

The main advantage of trading using opposite Baron Real and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Real position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
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The idea behind Baron Real Estate and International Business Machines 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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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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