Correlation Between Baird Strategic and Western Asset
Can any of the company-specific risk be diversified away by investing in both Baird Strategic and Western Asset 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 Western Asset 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 Western Asset Municipal, you can compare the effects of market volatilities on Baird Strategic and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Strategic and Western Asset.
Diversification Opportunities for Baird Strategic and Western Asset
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baird and Western is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Baird Strategic Municipal and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Baird Strategic i.e., Baird Strategic and Western Asset go up and down completely randomly.
Pair Corralation between Baird Strategic and Western Asset
Assuming the 90 days horizon Baird Strategic Municipal is expected to generate 0.56 times more return on investment than Western Asset. However, Baird Strategic Municipal is 1.79 times less risky than Western Asset. It trades about 0.13 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.01 per unit of risk. If you would invest 963.00 in Baird Strategic Municipal on August 31, 2024 and sell it today you would earn a total of 72.00 from holding Baird Strategic Municipal or generate 7.48% 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. Western Asset Municipal
Performance |
| Timeline |
| Baird Strategic Municipal |
| Western Asset Municipal |
Baird Strategic and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Strategic and Western Asset
The main advantage of trading using opposite Baird Strategic and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Strategic position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. T Rowe Price | Western Asset vs. California Bond Fund | Western Asset vs. Blrc Sgy Mnp | Western Asset vs. Legg Mason Partners |
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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