Correlation Between Old Westbury and Baird Strategic
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Baird Strategic 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 Old Westbury and Baird Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Municipal and Baird Strategic Municipal, you can compare the effects of market volatilities on Old Westbury and Baird Strategic 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 Old Westbury with a short position of Baird Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Baird Strategic.
Diversification Opportunities for Old Westbury and Baird Strategic
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Baird is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Baird Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Strategic Municipal and Old Westbury 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 Old Westbury Municipal are associated (or correlated) with Baird Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Strategic Municipal has no effect on the direction of Old Westbury i.e., Old Westbury and Baird Strategic go up and down completely randomly.
Pair Corralation between Old Westbury and Baird Strategic
Assuming the 90 days horizon Old Westbury is expected to generate 1.42 times less return on investment than Baird Strategic. In addition to that, Old Westbury is 1.16 times more volatile than Baird Strategic Municipal. It trades about 0.11 of its total potential returns per unit of risk. Baird Strategic Municipal is currently generating about 0.19 per unit of volatility. If you would invest 966.00 in Baird Strategic Municipal on September 14, 2024 and sell it today you would earn a total of 68.00 from holding Baird Strategic Municipal or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Municipal vs. Baird Strategic Municipal
Performance |
| Timeline |
| Old Westbury Municipal |
| Baird Strategic Municipal |
Old Westbury and Baird Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Baird Strategic
The main advantage of trading using opposite Old Westbury and Baird Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Baird Strategic 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 Strategic will offset losses from the drop in Baird Strategic's long position.| Old Westbury vs. Old Westbury All | Old Westbury vs. Old Westbury California | Old Westbury vs. Old Westbury Credit | Old Westbury vs. Old Westbury Fixed |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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