Correlation Between Baird Strategic and Federated Ohio
Can any of the company-specific risk be diversified away by investing in both Baird Strategic and Federated Ohio 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 Strategic and Federated Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Strategic Municipal and Federated Ohio Municipal, you can compare the effects of market volatilities on Baird Strategic and Federated Ohio 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 Strategic with a short position of Federated Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Strategic and Federated Ohio.
Diversification Opportunities for Baird Strategic and Federated Ohio
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baird and FEDERATED is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Baird Strategic Municipal and Federated Ohio Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ohio Municipal and Baird Strategic 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 Strategic Municipal are associated (or correlated) with Federated Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ohio Municipal has no effect on the direction of Baird Strategic i.e., Baird Strategic and Federated Ohio go up and down completely randomly.
Pair Corralation between Baird Strategic and Federated Ohio
Assuming the 90 days horizon Baird Strategic is expected to generate 1.55 times less return on investment than Federated Ohio. But when comparing it to its historical volatility, Baird Strategic Municipal is 1.43 times less risky than Federated Ohio. It trades about 0.15 of its potential returns per unit of risk. Federated Ohio Municipal is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,039 in Federated Ohio Municipal on August 31, 2024 and sell it today you would earn a total of 11.00 from holding Federated Ohio Municipal or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Strategic Municipal vs. Federated Ohio Municipal
Performance |
| Timeline |
| Baird Strategic Municipal |
| Federated Ohio Municipal |
Baird Strategic and Federated Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Strategic and Federated Ohio
The main advantage of trading using opposite Baird Strategic and Federated Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Strategic position performs unexpectedly, Federated Ohio 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 Federated Ohio will offset losses from the drop in Federated Ohio's long position.| Baird Strategic vs. Federated Ohio Municipal | Baird Strategic vs. Versatile Bond Portfolio | Baird Strategic vs. Artisan High Income | Baird Strategic vs. Transamerica Intermediate Muni |
| Federated Ohio vs. Vanguard Ohio Long Term | Federated Ohio vs. Franklin Ohio Tax Free | Federated Ohio vs. Fidelity Ohio Municipal | Federated Ohio vs. HUMANA INC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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