Correlation Between Dow Jones and Baird Small/mid
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Baird Small/mid 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 Dow Jones and Baird Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Baird Smallmid Cap, you can compare the effects of market volatilities on Dow Jones and Baird Small/mid 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 Dow Jones with a short position of Baird Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Baird Small/mid.
Diversification Opportunities for Dow Jones and Baird Small/mid
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Baird is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Baird Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Smallmid Cap and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Baird Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Smallmid Cap has no effect on the direction of Dow Jones i.e., Dow Jones and Baird Small/mid go up and down completely randomly.
Pair Corralation between Dow Jones and Baird Small/mid
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.84 times less return on investment than Baird Small/mid. But when comparing it to its historical volatility, Dow Jones Industrial is 1.3 times less risky than Baird Small/mid. It trades about 0.25 of its potential returns per unit of risk. Baird Smallmid Cap is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,664 in Baird Smallmid Cap on August 29, 2024 and sell it today you would earn a total of 173.00 from holding Baird Smallmid Cap or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Baird Smallmid Cap
Performance |
| Timeline |
Dow Jones and Baird Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Baird Smallmid Cap
Pair trading matchups for Baird Small/mid
Pair Trading with Dow Jones and Baird Small/mid
The main advantage of trading using opposite Dow Jones and Baird Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Baird Small/mid 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 Small/mid will offset losses from the drop in Baird Small/mid's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Baird Small/mid vs. Cutler Equity | Baird Small/mid vs. Vanguard Equity Income | Baird Small/mid vs. Ultra Short Fixed Income | Baird Small/mid vs. Doubleline E Fixed |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |