Correlation Between Baird Small/mid and Baird Aggregate
Can any of the company-specific risk be diversified away by investing in both Baird Small/mid and Baird Aggregate 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 Aggregate 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 Aggregate Bond, you can compare the effects of market volatilities on Baird Small/mid and Baird Aggregate 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 Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and Baird Aggregate.
Diversification Opportunities for Baird Small/mid and Baird Aggregate
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baird and BAIRD is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap and Baird Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Aggregate Bond 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 Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Aggregate Bond has no effect on the direction of Baird Small/mid i.e., Baird Small/mid and Baird Aggregate go up and down completely randomly.
Pair Corralation between Baird Small/mid and Baird Aggregate
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 3.32 times more return on investment than Baird Aggregate. However, Baird Small/mid is 3.32 times more volatile than Baird Aggregate Bond. It trades about 0.37 of its potential returns per unit of risk. Baird Aggregate Bond is currently generating about 0.08 per unit of risk. If you would invest 1,635 in Baird Smallmid Cap on August 29, 2024 and sell it today you would earn a total of 176.00 from holding Baird Smallmid Cap or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Baird Aggregate Bond
Performance |
| Timeline |
| Baird Smallmid Cap |
| Baird Aggregate Bond |
Baird Small/mid and Baird Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Small/mid and Baird Aggregate
The main advantage of trading using opposite Baird Small/mid and Baird Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Small/mid position performs unexpectedly, Baird Aggregate 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 Aggregate will offset losses from the drop in Baird Aggregate's long position.| Baird Small/mid vs. T Rowe Price | Baird Small/mid vs. T Rowe Price | Baird Small/mid vs. T Rowe Price | Baird Small/mid vs. Midcap Fund Class |
| Baird Aggregate vs. Vanguard Total Bond | Baird Aggregate vs. Vanguard Total Bond | Baird Aggregate vs. Vanguard Total Bond | Baird Aggregate 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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