Correlation Between Baird Small/mid and Causeway Emerging
Can any of the company-specific risk be diversified away by investing in both Baird Small/mid and Causeway Emerging 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 Causeway Emerging 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 Causeway Emerging Markets, you can compare the effects of market volatilities on Baird Small/mid and Causeway Emerging 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 Causeway Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and Causeway Emerging.
Diversification Opportunities for Baird Small/mid and Causeway Emerging
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Baird and Causeway is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap and Causeway Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway Emerging Markets 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 Causeway Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway Emerging Markets has no effect on the direction of Baird Small/mid i.e., Baird Small/mid and Causeway Emerging go up and down completely randomly.
Pair Corralation between Baird Small/mid and Causeway Emerging
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 1.34 times more return on investment than Causeway Emerging. However, Baird Small/mid is 1.34 times more volatile than Causeway Emerging Markets. It trades about 0.36 of its potential returns per unit of risk. Causeway Emerging Markets is currently generating about -0.19 per unit of risk. If you would invest 1,616 in Baird Smallmid Cap on August 26, 2024 and sell it today you would earn a total of 166.00 from holding Baird Smallmid Cap or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Causeway Emerging Markets
Performance |
| Timeline |
| Baird Smallmid Cap |
| Causeway Emerging Markets |
Baird Small/mid and Causeway Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Small/mid and Causeway Emerging
The main advantage of trading using opposite Baird Small/mid and Causeway Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Small/mid position performs unexpectedly, Causeway Emerging 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 Causeway Emerging will offset losses from the drop in Causeway Emerging's long position.| Baird Small/mid vs. Baird Aggregate Bond | Baird Small/mid vs. Baird Aggregate Bond | Baird Small/mid vs. Baird Short Term Bond | Baird Small/mid vs. Baird Short Term Bond |
| Causeway Emerging vs. Baird Smallmid Cap | Causeway Emerging vs. Chartwell Small Cap | Causeway Emerging vs. Touchstone Small Cap | Causeway Emerging vs. Artisan 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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