Correlation Between Baird Strategic and Short Duration
Can any of the company-specific risk be diversified away by investing in both Baird Strategic and Short Duration 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 Short Duration 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 Short Duration Bond, you can compare the effects of market volatilities on Baird Strategic and Short Duration 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 Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Strategic and Short Duration.
Diversification Opportunities for Baird Strategic and Short Duration
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baird and Short is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Baird Strategic Municipal and Short Duration Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Bond 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Bond has no effect on the direction of Baird Strategic i.e., Baird Strategic and Short Duration go up and down completely randomly.
Pair Corralation between Baird Strategic and Short Duration
Assuming the 90 days horizon Baird Strategic Municipal is expected to generate 1.97 times more return on investment than Short Duration. However, Baird Strategic is 1.97 times more volatile than Short Duration Bond. It trades about 0.17 of its potential returns per unit of risk. Short Duration Bond is currently generating about 0.07 per unit of risk. If you would invest 1,027 in Baird Strategic Municipal on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Baird Strategic Municipal or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Strategic Municipal vs. Short Duration Bond
Performance |
| Timeline |
| Baird Strategic Municipal |
| Short Duration Bond |
Baird Strategic and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Strategic and Short Duration
The main advantage of trading using opposite Baird Strategic and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Strategic position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration's long position.| Baird Strategic vs. Kinetics Small Cap | Baird Strategic vs. The Hartford Small | Baird Strategic vs. Ab Small Cap | Baird Strategic vs. Gmo Small Cap |
| Short Duration vs. Morningstar Municipal Bond | Short Duration vs. Franklin High Yield | Short Duration vs. Baird Strategic Municipal | Short Duration vs. Nebraska Municipal Fund |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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