Correlation Between Baron Discovery and Hennessy Focus
Can any of the company-specific risk be diversified away by investing in both Baron Discovery and Hennessy Focus 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 Discovery and Hennessy Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Discovery Fund and Hennessy Focus Fund, you can compare the effects of market volatilities on Baron Discovery and Hennessy Focus 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 Discovery with a short position of Hennessy Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Discovery and Hennessy Focus.
Diversification Opportunities for Baron Discovery and Hennessy Focus
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baron and Hennessy is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Baron Discovery Fund and Hennessy Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Focus and Baron Discovery 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 Discovery Fund are associated (or correlated) with Hennessy Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Focus has no effect on the direction of Baron Discovery i.e., Baron Discovery and Hennessy Focus go up and down completely randomly.
Pair Corralation between Baron Discovery and Hennessy Focus
Assuming the 90 days horizon Baron Discovery Fund is expected to generate 0.26 times more return on investment than Hennessy Focus. However, Baron Discovery Fund is 3.8 times less risky than Hennessy Focus. It trades about 0.01 of its potential returns per unit of risk. Hennessy Focus Fund is currently generating about -0.13 per unit of risk. If you would invest 3,678 in Baron Discovery Fund on October 8, 2025 and sell it today you would earn a total of 4.00 from holding Baron Discovery Fund or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Discovery Fund vs. Hennessy Focus Fund
Performance |
| Timeline |
| Baron Discovery |
| Hennessy Focus |
Baron Discovery and Hennessy Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Discovery and Hennessy Focus
The main advantage of trading using opposite Baron Discovery and Hennessy Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Discovery position performs unexpectedly, Hennessy Focus 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 Hennessy Focus will offset losses from the drop in Hennessy Focus' long position.| Baron Discovery vs. Baron Discovery Fund | Baron Discovery vs. Value Line Mid | Baron Discovery vs. Siit Dynamic Asset | Baron Discovery vs. Baron Opportunity Fund |
| Hennessy Focus vs. Hennessy Focus Fund | Hennessy Focus vs. Siit Large Cap | Hennessy Focus vs. Equity Growth Fund | Hennessy Focus vs. Fam Value Fund |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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