Correlation Between Baird Core and Harbor International
Can any of the company-specific risk be diversified away by investing in both Baird Core and Harbor International 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 Harbor International 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 Harbor International Fund, you can compare the effects of market volatilities on Baird Core and Harbor International 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 Harbor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Core and Harbor International.
Diversification Opportunities for Baird Core and Harbor International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baird and Harbor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Baird E Plus and Harbor International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor International 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 Harbor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor International has no effect on the direction of Baird Core i.e., Baird Core and Harbor International go up and down completely randomly.
Pair Corralation between Baird Core and Harbor International
Assuming the 90 days horizon Baird E Plus is expected to generate 0.35 times more return on investment than Harbor International. However, Baird E Plus is 2.89 times less risky than Harbor International. It trades about 0.1 of its potential returns per unit of risk. Harbor International Fund is currently generating about -0.01 per unit of risk. If you would invest 1,028 in Baird E Plus on August 29, 2024 and sell it today you would earn a total of 42.00 from holding Baird E Plus or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird E Plus vs. Harbor International Fund
Performance |
| Timeline |
| Baird E Plus |
| Harbor International |
Baird Core and Harbor International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Core and Harbor International
The main advantage of trading using opposite Baird Core and Harbor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Core position performs unexpectedly, Harbor International 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 Harbor International will offset losses from the drop in Harbor International'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 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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