Correlation Between Baird Small/mid and William Blair

Can any of the company-specific risk be diversified away by investing in both Baird Small/mid and William Blair 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 Small/mid and William Blair into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baird Smallmid Cap and William Blair China, you can compare the effects of market volatilities on Baird Small/mid and William Blair 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 Small/mid with a short position of William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and William Blair.

Diversification Opportunities for Baird Small/mid and William Blair

-0.44

Correlation Coefficient

Baird Small/mid  William Blair

Very good diversification

The 3 months correlation between Baird and William is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap and William Blair China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair China and Baird Small/mid 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 Smallmid Cap are associated (or correlated) with William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair China has no effect on the direction of Baird Small/mid i.e., Baird Small/mid and William Blair go up and down completely randomly.

Pair Corralation between Baird Small/mid and William Blair

Assuming the 90 days horizon Baird Smallmid Cap is expected to under-perform the William Blair. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baird Smallmid Cap is 1.26 times less risky than William Blair. The mutual fund trades about -0.14 of its potential returns per unit of risk. The William Blair China is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  514.00  in William Blair China on December 2, 2024 and sell it today you would earn a total of  42.00  from holding William Blair China or generate 8.17% return on investment over 90 days.

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

Baird Smallmid Cap  vs.  William Blair China

Baird Smallmid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baird Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

William Blair China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair China are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, William Blair may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Baird Small/mid and William Blair

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

The idea behind Baird Smallmid Cap and William Blair China 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.