Correlation Between The Brown and Baron Emerging

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

By analyzing existing cross correlation between The Brown Capital and Baron Emerging Markets, you can compare the effects of market volatilities on The Brown and Baron Emerging 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 The Brown with a short position of Baron Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Brown and Baron Emerging.

Diversification Opportunities for The Brown and Baron Emerging

0.96

Correlation Coefficient

The Brown  Baron Emerging

Almost no diversification

The 3 months correlation between The and Baron is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding The Brown Capital and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets and The Brown 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 The Brown Capital are associated (or correlated) with Baron Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of The Brown i.e., The Brown and Baron Emerging go up and down completely randomly.

Pair Corralation between The Brown and Baron Emerging

Assuming the 90 days horizon The Brown is expected to generate 1.13 times less return on investment than Baron Emerging. But when comparing it to its historical volatility, The Brown Capital is 1.02 times less risky than Baron Emerging. It trades about 0.13 of its potential returns per unit of risk. Baron Emerging Markets is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,616  in Baron Emerging Markets on May 6, 2025 and sell it today you would earn a total of  114.00  from holding Baron Emerging Markets or generate 7.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

The Brown Capital  vs.  Baron Emerging Markets

Brown Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Brown Capital are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, The Brown may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Baron Emerging Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Baron Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with The Brown and Baron Emerging

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

The idea behind The Brown Capital and Baron Emerging Markets 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.