Correlation Between Baird Smallmid and Baird Strategic
Can any of the company-specific risk be diversified away by investing in both Baird Smallmid 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 Smallmid 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 Smallmid 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 Smallmid with a short position of Baird Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Smallmid and Baird Strategic.
Diversification Opportunities for Baird Smallmid and Baird Strategic
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baird and Baird is 0.63. 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 Smallmid 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 Smallmid i.e., Baird Smallmid and Baird Strategic go up and down completely randomly.
Pair Corralation between Baird Smallmid and Baird Strategic
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 5.42 times more return on investment than Baird Strategic. However, Baird Smallmid is 5.42 times more volatile than Baird Strategic Municipal. It trades about 0.27 of its potential returns per unit of risk. Baird Strategic Municipal is currently generating about 0.16 per unit of risk. If you would invest 1,699 in Baird Smallmid Cap on October 20, 2024 and sell it today you would earn a total of 63.00 from holding Baird Smallmid Cap or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Baird Strategic Municipal
Performance |
| Timeline |
| Baird Smallmid Cap |
| Baird Strategic Municipal |
Baird Smallmid and Baird Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Smallmid and Baird Strategic
The main advantage of trading using opposite Baird Smallmid and Baird Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Smallmid 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 Smallmid vs. Baird Aggregate Bond | Baird Smallmid vs. Baird Aggregate Bond | Baird Smallmid vs. Baird Short Term Bond | Baird Smallmid vs. Baird Short Term Bond |
| Baird Strategic vs. Baird Aggregate Bond | Baird Strategic vs. Baird Aggregate Bond | Baird Strategic vs. Baird Short Term Bond | Baird Strategic vs. Baird Short Term Bond |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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