Correlation Between Baird Small/mid and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Baird Small/mid 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 Small/mid 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 Smallmid Cap and Dow Jones Industrial, you can compare the effects of market volatilities on Baird Small/mid 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 Small/mid with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and Dow Jones.
Diversification Opportunities for Baird Small/mid and Dow Jones
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baird and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap 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 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 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 Small/mid i.e., Baird Small/mid and Dow Jones go up and down completely randomly.
Pair Corralation between Baird Small/mid and Dow Jones
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 1.3 times more return on investment than Dow Jones. However, Baird Small/mid is 1.3 times more volatile than Dow Jones Industrial. It trades about 0.35 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.25 per unit of risk. If you would invest 1,664 in Baird Smallmid Cap on August 29, 2024 and sell it today you would earn a total of 173.00 from holding Baird Smallmid Cap or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Dow Jones Industrial
Performance |
| Timeline |
Baird Small/mid and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Baird Smallmid Cap
Pair trading matchups for Baird Small/mid
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Baird Small/mid and Dow Jones
The main advantage of trading using opposite Baird Small/mid and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Small/mid 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 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 |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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