Correlation Between American Growth and Baird Strategic
Can any of the company-specific risk be diversified away by investing in both American Growth and Baird Strategic 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 American Growth and Baird Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Growth Fund and Baird Strategic Municipal, you can compare the effects of market volatilities on American Growth and Baird Strategic 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 American Growth with a short position of Baird Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Growth and Baird Strategic.
Diversification Opportunities for American Growth and Baird Strategic
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Baird is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding American Growth Fund and Baird Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Strategic Municipal and American Growth 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 American Growth Fund are associated (or correlated) with Baird Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Strategic Municipal has no effect on the direction of American Growth i.e., American Growth and Baird Strategic go up and down completely randomly.
Pair Corralation between American Growth and Baird Strategic
Assuming the 90 days horizon American Growth Fund is expected to generate 9.34 times more return on investment than Baird Strategic. However, American Growth is 9.34 times more volatile than Baird Strategic Municipal. It trades about 0.04 of its potential returns per unit of risk. Baird Strategic Municipal is currently generating about 0.12 per unit of risk. If you would invest 694.00 in American Growth Fund on September 14, 2024 and sell it today you would earn a total of 67.00 from holding American Growth Fund or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
American Growth Fund vs. Baird Strategic Municipal
Performance |
| Timeline |
| American Growth |
| Baird Strategic Municipal |
American Growth and Baird Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Growth and Baird Strategic
The main advantage of trading using opposite American Growth and Baird Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Growth position performs unexpectedly, Baird Strategic 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 Baird Strategic will offset losses from the drop in Baird Strategic's long position.| American Growth vs. Lord Abbett Health | American Growth vs. Health Biotchnology Portfolio | American Growth vs. Highland Longshort Healthcare | American Growth vs. Alphacentric Lifesci Healthcare |
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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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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