Correlation Between Guidepath(r) Managed and Baird Municipal
Can any of the company-specific risk be diversified away by investing in both Guidepath(r) Managed and Baird Municipal 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 Guidepath(r) Managed and Baird Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidepath Managed Futures and Baird Municipal Bond, you can compare the effects of market volatilities on Guidepath(r) Managed and Baird Municipal 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 Guidepath(r) Managed with a short position of Baird Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidepath(r) Managed and Baird Municipal.
Diversification Opportunities for Guidepath(r) Managed and Baird Municipal
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guidepath(r) and Baird is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Guidepath Managed Futures and Baird Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Municipal Bond and Guidepath(r) Managed 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 Guidepath Managed Futures are associated (or correlated) with Baird Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Municipal Bond has no effect on the direction of Guidepath(r) Managed i.e., Guidepath(r) Managed and Baird Municipal go up and down completely randomly.
Pair Corralation between Guidepath(r) Managed and Baird Municipal
Assuming the 90 days horizon Guidepath Managed Futures is expected to generate 2.04 times more return on investment than Baird Municipal. However, Guidepath(r) Managed is 2.04 times more volatile than Baird Municipal Bond. It trades about 0.14 of its potential returns per unit of risk. Baird Municipal Bond is currently generating about 0.2 per unit of risk. If you would invest 768.00 in Guidepath Managed Futures on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Guidepath Managed Futures or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Guidepath Managed Futures vs. Baird Municipal Bond
Performance |
| Timeline |
| Guidepath Managed Futures |
| Baird Municipal Bond |
Guidepath(r) Managed and Baird Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidepath(r) Managed and Baird Municipal
The main advantage of trading using opposite Guidepath(r) Managed and Baird Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidepath(r) Managed position performs unexpectedly, Baird Municipal 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 Municipal will offset losses from the drop in Baird Municipal's long position.| Guidepath(r) Managed vs. Pimco Income Strategy | Guidepath(r) Managed vs. American Balanced Fund | Guidepath(r) Managed vs. Nuveen Real Asset | Guidepath(r) Managed vs. New Economy Fund |
| Baird Municipal vs. Ab Bond Inflation | Baird Municipal vs. Guidepath Managed Futures | Baird Municipal vs. Arrow Managed Futures | Baird Municipal vs. Ab Bond Inflation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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