Correlation Between Baird Short-term and Vanguard Short-term
Can any of the company-specific risk be diversified away by investing in both Baird Short-term and Vanguard Short-term 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 Baird Short-term and Vanguard Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Short Term Bond and Vanguard Short Term Porate, you can compare the effects of market volatilities on Baird Short-term and Vanguard Short-term 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 Baird Short-term with a short position of Vanguard Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Short-term and Vanguard Short-term.
Diversification Opportunities for Baird Short-term and Vanguard Short-term
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BAIRD and Vanguard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Baird Short Term Bond and Vanguard Short Term Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term and Baird Short-term 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 Baird Short Term Bond are associated (or correlated) with Vanguard Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Baird Short-term i.e., Baird Short-term and Vanguard Short-term go up and down completely randomly.
Pair Corralation between Baird Short-term and Vanguard Short-term
Assuming the 90 days horizon Baird Short Term Bond is expected to generate 0.64 times more return on investment than Vanguard Short-term. However, Baird Short Term Bond is 1.56 times less risky than Vanguard Short-term. It trades about -0.07 of its potential returns per unit of risk. Vanguard Short Term Porate is currently generating about -0.1 per unit of risk. If you would invest 939.00 in Baird Short Term Bond on January 25, 2024 and sell it today you would lose (2.00) from holding Baird Short Term Bond or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Short Term Bond vs. Vanguard Short Term Porate
Performance |
| Timeline |
| Baird Short Term |
| Vanguard Short Term |
Baird Short-term and Vanguard Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Short-term and Vanguard Short-term
The main advantage of trading using opposite Baird Short-term and Vanguard Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Short-term position performs unexpectedly, Vanguard Short-term 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 Vanguard Short-term will offset losses from the drop in Vanguard Short-term's long position.| Baird Short-term vs. Western Asset E | Baird Short-term vs. Blackrock Bd Fd | Baird Short-term vs. Baird Aggregate Bond | Baird Short-term vs. Champlain Mid Cap |
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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