Correlation Between Baird Short-term and Baird Aggregate
Can any of the company-specific risk be diversified away by investing in both Baird Short-term and Baird Aggregate 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 Short-term and Baird Aggregate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Short Term Municipal and Baird Aggregate Bond, you can compare the effects of market volatilities on Baird Short-term and Baird Aggregate 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 Short-term with a short position of Baird Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Short-term and Baird Aggregate.
Diversification Opportunities for Baird Short-term and Baird Aggregate
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Baird and Baird is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Baird Short Term Municipal and Baird Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Aggregate Bond and Baird Short-term 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 Short Term Municipal are associated (or correlated) with Baird Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Aggregate Bond has no effect on the direction of Baird Short-term i.e., Baird Short-term and Baird Aggregate go up and down completely randomly.
Pair Corralation between Baird Short-term and Baird Aggregate
Assuming the 90 days horizon Baird Short-term is expected to generate 1.13 times less return on investment than Baird Aggregate. But when comparing it to its historical volatility, Baird Short Term Municipal is 4.08 times less risky than Baird Aggregate. It trades about 0.14 of its potential returns per unit of risk. Baird Aggregate Bond is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Baird Aggregate Bond on August 30, 2024 and sell it today you would earn a total of 73.00 from holding Baird Aggregate Bond or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Short Term Municipal vs. Baird Aggregate Bond
Performance |
| Timeline |
| Baird Short Term |
| Baird Aggregate Bond |
Baird Short-term and Baird Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Short-term and Baird Aggregate
The main advantage of trading using opposite Baird Short-term and Baird Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Short-term position performs unexpectedly, Baird Aggregate 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 Baird Aggregate will offset losses from the drop in Baird Aggregate's long position.| Baird Short-term vs. Metropolitan West High | Baird Short-term vs. Lgm Risk Managed | Baird Short-term vs. Victory High Income | Baird Short-term vs. Ab High Income |
| Baird Aggregate vs. Merck Company | Baird Aggregate vs. Pharvaris BV | Baird Aggregate vs. Brinker International | Baird Aggregate vs. Alcoa Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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