Correlation Between Baird Midcap and Paradigm Select
Can any of the company-specific risk be diversified away by investing in both Baird Midcap and Paradigm Select 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 Paradigm Select 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 Paradigm Select Fund, you can compare the effects of market volatilities on Baird Midcap and Paradigm Select 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 Paradigm Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Midcap and Paradigm Select.
Diversification Opportunities for Baird Midcap and Paradigm Select
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baird and Paradigm is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Baird Midcap Fund and Paradigm Select Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm Select 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 Paradigm Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm Select has no effect on the direction of Baird Midcap i.e., Baird Midcap and Paradigm Select go up and down completely randomly.
Pair Corralation between Baird Midcap and Paradigm Select
Assuming the 90 days horizon Baird Midcap is expected to generate 3.42 times less return on investment than Paradigm Select. But when comparing it to its historical volatility, Baird Midcap Fund is 1.3 times less risky than Paradigm Select. It trades about 0.03 of its potential returns per unit of risk. Paradigm Select Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,911 in Paradigm Select Fund on August 25, 2024 and sell it today you would earn a total of 1,497 from holding Paradigm Select Fund or generate 21.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Midcap Fund vs. Paradigm Select Fund
Performance |
| Timeline |
| Baird Midcap |
| Paradigm Select |
Baird Midcap and Paradigm Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Midcap and Paradigm Select
The main advantage of trading using opposite Baird Midcap and Paradigm Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Midcap position performs unexpectedly, Paradigm Select 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 Paradigm Select will offset losses from the drop in Paradigm Select's long position.| Baird Midcap vs. World Energy Fund | Baird Midcap vs. Hennessy Bp Energy | Baird Midcap vs. Icon Natural Resources | Baird Midcap vs. Alpsalerian Energy Infrastructure |
| Paradigm Select vs. Paradigm Micro Cap Fund | Paradigm Select vs. Paradigm Value Fund | Paradigm Select vs. Needham Small Cap | Paradigm Select vs. Touchstone Mid Cap |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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