Correlation Between Baird Strategic and Hartford Municipal

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

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

Diversification Opportunities for Baird Strategic and Hartford Municipal

0.62

Correlation Coefficient

Baird Strategic  Hartford Municipal

Poor diversification

The 3 months correlation between Baird and Hartford is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Baird Strategic Municipal and The Hartford Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Municipal and Baird Strategic 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 Strategic Municipal are associated (or correlated) with Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Municipal has no effect on the direction of Baird Strategic i.e., Baird Strategic and Hartford Municipal go up and down completely randomly.

Pair Corralation between Baird Strategic and Hartford Municipal

Assuming the 90 days horizon Baird Strategic Municipal is expected to generate 0.76 times more return on investment than Hartford Municipal. However, Baird Strategic Municipal is 1.31 times less risky than Hartford Municipal. It trades about 0.08 of its potential returns per unit of risk. The Hartford Municipal is currently generating about 0.05 per unit of risk. If you would invest  998.00  in Baird Strategic Municipal on October 5, 2024 and sell it today you would earn a total of  27.00  from holding Baird Strategic Municipal or generate 2.71% return on investment over 90 days.

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

Baird Strategic Municipal  vs.  The Hartford Municipal

Baird Strategic Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

The Hartford Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Hartford Municipal 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 Strategic and Hartford Municipal

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

The idea behind Baird Strategic Municipal and The Hartford Municipal 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.