Correlation Between Baird Strategic and Vanguard Value
Can any of the company-specific risk be diversified away by investing in both Baird Strategic and Vanguard Value 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 Vanguard Value 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 Vanguard Value Index, you can compare the effects of market volatilities on Baird Strategic and Vanguard Value 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 Vanguard Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Strategic and Vanguard Value.
Diversification Opportunities for Baird Strategic and Vanguard Value
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Baird and Vanguard is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Baird Strategic Municipal and Vanguard Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Index 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 Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Index has no effect on the direction of Baird Strategic i.e., Baird Strategic and Vanguard Value go up and down completely randomly.
Pair Corralation between Baird Strategic and Vanguard Value
Assuming the 90 days horizon Baird Strategic is expected to generate 2.83 times less return on investment than Vanguard Value. But when comparing it to its historical volatility, Baird Strategic Municipal is 4.48 times less risky than Vanguard Value. It trades about 0.13 of its potential returns per unit of risk. Vanguard Value Index is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,237 in Vanguard Value Index on September 13, 2024 and sell it today you would earn a total of 1,628 from holding Vanguard Value Index or generate 31.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Strategic Municipal vs. Vanguard Value Index
Performance |
| Timeline |
| Baird Strategic Municipal |
| Vanguard Value Index |
Baird Strategic and Vanguard Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Strategic and Vanguard Value
The main advantage of trading using opposite Baird Strategic and Vanguard Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Strategic position performs unexpectedly, Vanguard Value 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 Vanguard Value will offset losses from the drop in Vanguard Value's long position.| Baird Strategic vs. Short Precious Metals | Baird Strategic vs. James Balanced Golden | Baird Strategic vs. Oppenheimer Gold Special | Baird Strategic vs. Goldman Sachs Clean |
| Vanguard Value vs. T Rowe Price | Vanguard Value vs. Baird Strategic Municipal | Vanguard Value vs. Gamco Global Telecommunications | Vanguard Value vs. Nuveen Minnesota Municipal |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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