Correlation Between Baird Municipal and Baird Intermediate
Can any of the company-specific risk be diversified away by investing in both Baird Municipal and Baird Intermediate 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 Municipal and Baird Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Municipal Bond and Baird Intermediate Bond, you can compare the effects of market volatilities on Baird Municipal and Baird Intermediate 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 Municipal with a short position of Baird Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Municipal and Baird Intermediate.
Diversification Opportunities for Baird Municipal and Baird Intermediate
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baird and Baird is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Baird Municipal Bond and Baird Intermediate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Intermediate Bond and Baird Municipal 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 Municipal Bond are associated (or correlated) with Baird Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Intermediate Bond has no effect on the direction of Baird Municipal i.e., Baird Municipal and Baird Intermediate go up and down completely randomly.
Pair Corralation between Baird Municipal and Baird Intermediate
Assuming the 90 days horizon Baird Municipal is expected to generate 1.19 times less return on investment than Baird Intermediate. But when comparing it to its historical volatility, Baird Municipal Bond is 1.12 times less risky than Baird Intermediate. It trades about 0.09 of its potential returns per unit of risk. Baird Intermediate Bond is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 997.00 in Baird Intermediate Bond on August 29, 2024 and sell it today you would earn a total of 38.00 from holding Baird Intermediate Bond or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Municipal Bond vs. Baird Intermediate Bond
Performance |
| Timeline |
| Baird Municipal Bond |
| Baird Intermediate Bond |
Baird Municipal and Baird Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Municipal and Baird Intermediate
The main advantage of trading using opposite Baird Municipal and Baird Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Municipal position performs unexpectedly, Baird Intermediate 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 Intermediate will offset losses from the drop in Baird Intermediate's long position.| Baird Municipal vs. Blrc Sgy Mnp | Baird Municipal vs. Federated Short Intermediate Duration | Baird Municipal vs. Sterling Capital Short | Baird Municipal vs. T Rowe Price |
| Baird Intermediate vs. Vanguard Total Bond | Baird Intermediate vs. Vanguard Total Bond | Baird Intermediate vs. Vanguard Total Bond | Baird Intermediate vs. Bond Fund Of |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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