Correlation Between Baird Small/mid and Baird Strategic
Can any of the company-specific risk be diversified away by investing in both Baird Small/mid and Baird Strategic 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 Small/mid and Baird Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Smallmid Cap and Baird Strategic Municipal, you can compare the effects of market volatilities on Baird Small/mid and Baird Strategic 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 Small/mid with a short position of Baird Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and Baird Strategic.
Diversification Opportunities for Baird Small/mid and Baird Strategic
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baird and Baird is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap and Baird Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Strategic Municipal and Baird Small/mid 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 Smallmid Cap are associated (or correlated) with Baird Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Strategic Municipal has no effect on the direction of Baird Small/mid i.e., Baird Small/mid and Baird Strategic go up and down completely randomly.
Pair Corralation between Baird Small/mid and Baird Strategic
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 7.0 times more return on investment than Baird Strategic. However, Baird Small/mid is 7.0 times more volatile than Baird Strategic Municipal. It trades about 0.04 of its potential returns per unit of risk. Baird Strategic Municipal is currently generating about 0.12 per unit of risk. If you would invest 1,488 in Baird Smallmid Cap on August 29, 2024 and sell it today you would earn a total of 349.00 from holding Baird Smallmid Cap or generate 23.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Baird Strategic Municipal
Performance |
| Timeline |
| Baird Smallmid Cap |
| Baird Strategic Municipal |
Baird Small/mid and Baird Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Small/mid and Baird Strategic
The main advantage of trading using opposite Baird Small/mid and Baird Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Small/mid position performs unexpectedly, Baird Strategic 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 Strategic will offset losses from the drop in Baird Strategic's long position.| Baird Small/mid vs. Cutler Equity | Baird Small/mid vs. Vanguard Equity Income | Baird Small/mid vs. Ultra Short Fixed Income | Baird Small/mid vs. Doubleline E Fixed |
| Baird Strategic vs. Kinetics Small Cap | Baird Strategic vs. The Hartford Small | Baird Strategic vs. Ab Small Cap | Baird Strategic vs. Gmo Small 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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