Correlation Between Kensington Managed and Baird Smallmid
Can any of the company-specific risk be diversified away by investing in both Kensington Managed and Baird Smallmid 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 Kensington Managed and Baird Smallmid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kensington Managed Income and Baird Smallmid Cap, you can compare the effects of market volatilities on Kensington Managed and Baird Smallmid 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 Kensington Managed with a short position of Baird Smallmid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Managed and Baird Smallmid.
Diversification Opportunities for Kensington Managed and Baird Smallmid
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kensington and Baird is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Managed Income 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 Kensington 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 Kensington Managed Income are associated (or correlated) with Baird Smallmid. 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 Kensington Managed i.e., Kensington Managed and Baird Smallmid go up and down completely randomly.
Pair Corralation between Kensington Managed and Baird Smallmid
Assuming the 90 days horizon Kensington Managed is expected to generate 2.65 times less return on investment than Baird Smallmid. But when comparing it to its historical volatility, Kensington Managed Income is 6.42 times less risky than Baird Smallmid. It trades about 0.16 of its potential returns per unit of risk. Baird Smallmid Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,766 in Baird Smallmid Cap on September 12, 2024 and sell it today you would earn a total of 22.00 from holding Baird Smallmid Cap or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kensington Managed Income vs. Baird Smallmid Cap
Performance |
| Timeline |
| Kensington Managed Income |
| Baird Smallmid Cap |
Kensington Managed and Baird Smallmid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kensington Managed and Baird Smallmid
The main advantage of trading using opposite Kensington Managed and Baird Smallmid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kensington Managed position performs unexpectedly, Baird Smallmid 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 Smallmid will offset losses from the drop in Baird Smallmid's long position.| Kensington Managed vs. Delaware Limited Term Diversified | Kensington Managed vs. Huber Capital Diversified | Kensington Managed vs. Wasatch Small Cap | Kensington Managed vs. Adams Diversified Equity |
| Baird Smallmid vs. Ab Global Risk | Baird Smallmid vs. Franklin High Income | Baird Smallmid vs. Lgm Risk Managed | Baird Smallmid vs. California High Yield 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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