Correlation Between Baird Core and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Baird Core and Metropolitan West 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 Metropolitan West 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 Metropolitan West Intermediate, you can compare the effects of market volatilities on Baird Core and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Core and Metropolitan West.
Diversification Opportunities for Baird Core and Metropolitan West
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Baird and Metropolitan is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Baird E Plus and Metropolitan West Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West has no effect on the direction of Baird Core i.e., Baird Core and Metropolitan West go up and down completely randomly.
Pair Corralation between Baird Core and Metropolitan West
Assuming the 90 days horizon Baird E Plus is expected to generate 1.2 times more return on investment than Metropolitan West. However, Baird Core is 1.2 times more volatile than Metropolitan West Intermediate. It trades about 0.06 of its potential returns per unit of risk. Metropolitan West Intermediate is currently generating about 0.05 per unit of risk. If you would invest 997.00 in Baird E Plus on August 31, 2024 and sell it today you would earn a total of 76.00 from holding Baird E Plus or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Baird E Plus vs. Metropolitan West Intermediate
Performance |
| Timeline |
| Baird E Plus |
| Metropolitan West |
Baird Core and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Core and Metropolitan West
The main advantage of trading using opposite Baird Core and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Core position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Baird Core vs. Metropolitan West Total | Baird Core vs. Metropolitan West Total | Baird Core vs. Pimco Total Return | Baird Core vs. Total Return Fund |
| Metropolitan West vs. Metropolitan West Total | Metropolitan West vs. Metropolitan West Total | Metropolitan West vs. Pimco Total Return | Metropolitan West vs. Total Return 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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