Correlation Between Baird Midcap and Baird Core

Can any of the company-specific risk be diversified away by investing in both Baird Midcap and Baird Core 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 Baird Core 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 Baird E Plus, you can compare the effects of market volatilities on Baird Midcap and Baird Core 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 Baird Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Midcap and Baird Core.

Diversification Opportunities for Baird Midcap and Baird Core

0.37

Correlation Coefficient

Baird Midcap  Baird Core

Weak diversification

The 3 months correlation between Baird and Baird is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Baird Midcap Fund and Baird E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird E Plus 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 Baird Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird E Plus has no effect on the direction of Baird Midcap i.e., Baird Midcap and Baird Core go up and down completely randomly.

Pair Corralation between Baird Midcap and Baird Core

Assuming the 90 days horizon Baird Midcap Fund is expected to under-perform the Baird Core. In addition to that, Baird Midcap is 3.6 times more volatile than Baird E Plus. It trades about -0.23 of its total potential returns per unit of risk. Baird E Plus is currently generating about 0.04 per unit of volatility. If you would invest  1,013  in Baird E Plus on November 29, 2024 and sell it today you would earn a total of  6.00  from holding Baird E Plus or generate 0.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Baird Midcap Fund  vs.  Baird E Plus

Baird Midcap

Risk-Adjusted Performance

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Baird E Plus

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Baird E Plus are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Baird Core 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 Baird Core

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

The idea behind Baird Midcap Fund and Baird E Plus 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.

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