Correlation Between Baird Midcap and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Baird Midcap and Dow Jones 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 Midcap and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Midcap Fund and Dow Jones Industrial, you can compare the effects of market volatilities on Baird Midcap and Dow Jones 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 Midcap with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Midcap and Dow Jones.
Diversification Opportunities for Baird Midcap and Dow Jones
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baird and Dow is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Baird Midcap Fund and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Baird Midcap 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 Midcap Fund are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Baird Midcap i.e., Baird Midcap and Dow Jones go up and down completely randomly.
Pair Corralation between Baird Midcap and Dow Jones
Assuming the 90 days horizon Baird Midcap Fund is expected to generate 0.97 times more return on investment than Dow Jones. However, Baird Midcap Fund is 1.03 times less risky than Dow Jones. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.1 per unit of risk. If you would invest 2,388 in Baird Midcap Fund on October 23, 2024 and sell it today you would earn a total of 34.00 from holding Baird Midcap Fund or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Baird Midcap Fund vs. Dow Jones Industrial
Performance |
| Timeline |
Baird Midcap and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Baird Midcap Fund
Pair trading matchups for Baird Midcap
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Baird Midcap and Dow Jones
The main advantage of trading using opposite Baird Midcap and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Midcap position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Baird Midcap vs. Baird Intermediate Bond | Baird Midcap vs. T Rowe Price | Baird Midcap vs. Baird Aggregate Bond | Baird Midcap vs. Blackrock Global Longshort |
| Dow Jones vs. Grupo Televisa SAB | Dow Jones vs. NiSource | Dow Jones vs. Kinetik Holdings | Dow Jones vs. Empresa Distribuidora y |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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