Correlation Between Baird Core and Baird Midcap
Can any of the company-specific risk be diversified away by investing in both Baird Core and Baird Midcap 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 Core and Baird Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird E Plus and Baird Midcap Fund, you can compare the effects of market volatilities on Baird Core and Baird Midcap 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 Core with a short position of Baird Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Core and Baird Midcap.
Diversification Opportunities for Baird Core and Baird Midcap
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baird and Baird is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Baird E Plus and Baird Midcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Midcap and Baird Core 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 E Plus are associated (or correlated) with Baird Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Midcap has no effect on the direction of Baird Core i.e., Baird Core and Baird Midcap go up and down completely randomly.
Pair Corralation between Baird Core and Baird Midcap
Assuming the 90 days horizon Baird Core is expected to generate 2.5 times less return on investment than Baird Midcap. But when comparing it to its historical volatility, Baird E Plus is 3.03 times less risky than Baird Midcap. It trades about 0.1 of its potential returns per unit of risk. Baird Midcap Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,395 in Baird Midcap Fund on August 29, 2024 and sell it today you would earn a total of 241.00 from holding Baird Midcap Fund or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird E Plus vs. Baird Midcap Fund
Performance |
| Timeline |
| Baird E Plus |
| Baird Midcap |
Baird Core and Baird Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Core and Baird Midcap
The main advantage of trading using opposite Baird Core and Baird Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Core position performs unexpectedly, Baird Midcap 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 Midcap will offset losses from the drop in Baird Midcap's long position.| Baird Core vs. Metropolitan West Total | Baird Core vs. Western Asset E | Baird Core vs. John Hancock Disciplined | Baird Core vs. American Beacon Bridgeway |
| Baird Midcap vs. Baird Intermediate Bond | Baird Midcap vs. T Rowe Price | Baird Midcap vs. Baird Aggregate Bond | Baird Midcap vs. Blackrock Global Longshort |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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