Correlation Between NYSE Composite and Baird Small/mid
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite 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 NYSE Composite and Baird Smallmid Cap, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Baird Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Baird Small/mid.
Diversification Opportunities for NYSE Composite and Baird Small/mid
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Baird is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 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 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 NYSE Composite i.e., NYSE Composite and Baird Small/mid go up and down completely randomly.
Pair Corralation between NYSE Composite and Baird Small/mid
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.05 times less return on investment than Baird Small/mid. But when comparing it to its historical volatility, NYSE Composite is 2.05 times less risky than Baird Small/mid. It trades about 0.42 of its potential returns per unit of risk. Baird Smallmid Cap is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 1,644 in Baird Smallmid Cap on September 1, 2024 and sell it today you would earn a total of 184.00 from holding Baird Smallmid Cap or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Baird Smallmid Cap
Performance |
| Timeline |
NYSE Composite and Baird Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Baird Smallmid Cap
Pair trading matchups for Baird Small/mid
Pair Trading with NYSE Composite and Baird Small/mid
The main advantage of trading using opposite NYSE Composite and Baird Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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