Correlation Between NYSE Composite and Baird Aggregate
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Baird Aggregate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Baird Aggregate Bond, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Baird Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Baird Aggregate.
Diversification Opportunities for NYSE Composite and Baird Aggregate
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Baird is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Baird Aggregate go up and down completely randomly.
Pair Corralation between NYSE Composite and Baird Aggregate
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.1 times more return on investment than Baird Aggregate. However, NYSE Composite is 2.1 times more volatile than Baird Aggregate Bond. It trades about 0.14 of its potential returns per unit of risk. Baird Aggregate Bond is currently generating about 0.09 per unit of risk. If you would invest 1,800,696 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 226,508 from holding NYSE Composite or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Baird Aggregate Bond
Performance |
| Timeline |
NYSE Composite and Baird Aggregate Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Baird Aggregate Bond
Pair trading matchups for Baird Aggregate
Pair Trading with NYSE Composite and Baird Aggregate
The main advantage of trading using opposite NYSE Composite and Baird Aggregate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Baird Aggregate vs. Metropolitan West Total | Baird Aggregate vs. Mfs Emerging Markets | Baird Aggregate vs. Jpmorgan E Bond | Baird Aggregate vs. Eaton Vance Income |
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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