Correlation Between Baird Small/mid and Aberdeen Gbl
Can any of the company-specific risk be diversified away by investing in both Baird Small/mid and Aberdeen Gbl 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 Aberdeen Gbl 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 Aberdeen Gbl Small, you can compare the effects of market volatilities on Baird Small/mid and Aberdeen Gbl 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 Aberdeen Gbl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and Aberdeen Gbl.
Diversification Opportunities for Baird Small/mid and Aberdeen Gbl
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baird and Aberdeen is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap and Aberdeen Gbl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Gbl Small 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 Aberdeen Gbl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Gbl Small has no effect on the direction of Baird Small/mid i.e., Baird Small/mid and Aberdeen Gbl go up and down completely randomly.
Pair Corralation between Baird Small/mid and Aberdeen Gbl
Assuming the 90 days horizon Baird Smallmid Cap is expected to generate 1.2 times more return on investment than Aberdeen Gbl. However, Baird Small/mid is 1.2 times more volatile than Aberdeen Gbl Small. It trades about 0.27 of its potential returns per unit of risk. Aberdeen Gbl Small is currently generating about -0.02 per unit of risk. If you would invest 1,522 in Baird Smallmid Cap on September 3, 2024 and sell it today you would earn a total of 277.00 from holding Baird Smallmid Cap or generate 18.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Aberdeen Gbl Small
Performance |
| Timeline |
| Baird Smallmid Cap |
| Aberdeen Gbl Small |
Baird Small/mid and Aberdeen Gbl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Small/mid and Aberdeen Gbl
The main advantage of trading using opposite Baird Small/mid and Aberdeen Gbl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Small/mid position performs unexpectedly, Aberdeen Gbl 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 Aberdeen Gbl will offset losses from the drop in Aberdeen Gbl'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. T Rowe Price |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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