Correlation Between Midcap Fund and Baird Small/mid
Can any of the company-specific risk be diversified away by investing in both Midcap Fund 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 Midcap Fund 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 Midcap Fund Class and Baird Smallmid Cap, you can compare the effects of market volatilities on Midcap Fund 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 Midcap Fund with a short position of Baird Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Fund and Baird Small/mid.
Diversification Opportunities for Midcap Fund and Baird Small/mid
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Midcap and Baird is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund Class 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 Midcap Fund 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 Midcap Fund Class 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 Midcap Fund i.e., Midcap Fund and Baird Small/mid go up and down completely randomly.
Pair Corralation between Midcap Fund and Baird Small/mid
Assuming the 90 days horizon Midcap Fund Class is expected to generate 0.8 times more return on investment than Baird Small/mid. However, Midcap Fund Class is 1.25 times less risky than Baird Small/mid. It trades about 0.17 of its potential returns per unit of risk. Baird Smallmid Cap is currently generating about 0.13 per unit of risk. If you would invest 3,280 in Midcap Fund Class on August 31, 2024 and sell it today you would earn a total of 653.00 from holding Midcap Fund Class or generate 19.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Midcap Fund Class vs. Baird Smallmid Cap
Performance |
| Timeline |
| Midcap Fund Class |
| Baird Smallmid Cap |
Midcap Fund and Baird Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midcap Fund and Baird Small/mid
The main advantage of trading using opposite Midcap Fund and Baird Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap Fund 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.| Midcap Fund vs. Allianzgi Convertible Income | Midcap Fund vs. Virtus Convertible | Midcap Fund vs. Putnam Convertible Incm Gwth | Midcap Fund vs. The Gamco Global |
| Baird Small/mid vs. Sentinel Small Pany | Baird Small/mid vs. Oppenheimer International Diversified | Baird Small/mid vs. Harbor Diversified International | Baird Small/mid vs. The Gabelli Small |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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