Correlation Between Baird Aggregate and Baird Municipal
Can any of the company-specific risk be diversified away by investing in both Baird Aggregate and Baird Municipal 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 Baird Aggregate and Baird Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Aggregate Bond and Baird Municipal Bond, you can compare the effects of market volatilities on Baird Aggregate and Baird Municipal 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 Baird Aggregate with a short position of Baird Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Aggregate and Baird Municipal.
Diversification Opportunities for Baird Aggregate and Baird Municipal
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baird and Baird is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Baird Aggregate Bond and Baird Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Municipal Bond and Baird Aggregate 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 Baird Aggregate Bond are associated (or correlated) with Baird Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Municipal Bond has no effect on the direction of Baird Aggregate i.e., Baird Aggregate and Baird Municipal go up and down completely randomly.
Pair Corralation between Baird Aggregate and Baird Municipal
Assuming the 90 days horizon Baird Aggregate is expected to generate 1.52 times less return on investment than Baird Municipal. In addition to that, Baird Aggregate is 1.37 times more volatile than Baird Municipal Bond. It trades about 0.09 of its total potential returns per unit of risk. Baird Municipal Bond is currently generating about 0.2 per unit of volatility. If you would invest 993.00 in Baird Municipal Bond on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Baird Municipal Bond or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Aggregate Bond vs. Baird Municipal Bond
Performance |
| Timeline |
| Baird Aggregate Bond |
| Baird Municipal Bond |
Baird Aggregate and Baird Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Aggregate and Baird Municipal
The main advantage of trading using opposite Baird Aggregate and Baird Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Aggregate position performs unexpectedly, Baird Municipal 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 Municipal will offset losses from the drop in Baird Municipal's long position.| Baird Aggregate vs. Metropolitan West Total | Baird Aggregate vs. Mfs Emerging Markets | Baird Aggregate vs. Jpmorgan E Bond | Baird Aggregate vs. Eaton Vance Income |
| Baird Municipal vs. Ab Bond Inflation | Baird Municipal vs. Guidepath Managed Futures | Baird Municipal vs. Arrow Managed Futures | Baird Municipal vs. Ab Bond Inflation |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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