Correlation Between Baird Midcap and Quantified Stf

Can any of the company-specific risk be diversified away by investing in both Baird Midcap and Quantified Stf 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 Midcap and Quantified Stf into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baird Midcap Fund and Quantified Stf Fund, you can compare the effects of market volatilities on Baird Midcap and Quantified Stf 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 Midcap with a short position of Quantified Stf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Midcap and Quantified Stf.

Diversification Opportunities for Baird Midcap and Quantified Stf

-0.15

Correlation Coefficient

Baird Midcap  Quantified Stf

Good diversification

The 3 months correlation between Baird and Quantified is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Baird Midcap Fund and Quantified Stf Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantified Stf and Baird Midcap 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 Midcap Fund are associated (or correlated) with Quantified Stf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantified Stf has no effect on the direction of Baird Midcap i.e., Baird Midcap and Quantified Stf go up and down completely randomly.

Pair Corralation between Baird Midcap and Quantified Stf

Assuming the 90 days horizon Baird Midcap Fund is expected to under-perform the Quantified Stf. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baird Midcap Fund is 1.44 times less risky than Quantified Stf. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Quantified Stf Fund is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,721  in Quantified Stf Fund on October 11, 2024 and sell it today you would lose (36.00) from holding Quantified Stf Fund or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Baird Midcap Fund  vs.  Quantified Stf Fund

Baird Midcap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baird Midcap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Baird Midcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Quantified Stf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quantified Stf Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Quantified Stf is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Baird Midcap and Quantified Stf

The main advantage of trading using opposite Baird Midcap and Quantified Stf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Midcap position performs unexpectedly, Quantified Stf 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 Quantified Stf will offset losses from the drop in Quantified Stf's long position.

The idea behind Baird Midcap Fund and Quantified Stf Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.