Correlation Between Baird Ultra and Frost Kempner
Can any of the company-specific risk be diversified away by investing in both Baird Ultra and Frost Kempner 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 Ultra and Frost Kempner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Ultra Short and Frost Kempner Treasury, you can compare the effects of market volatilities on Baird Ultra and Frost Kempner 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 Ultra with a short position of Frost Kempner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Ultra and Frost Kempner.
Diversification Opportunities for Baird Ultra and Frost Kempner
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baird and Frost is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Baird Ultra Short and Frost Kempner Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Kempner Treasury and Baird Ultra 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 Ultra Short are associated (or correlated) with Frost Kempner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Kempner Treasury has no effect on the direction of Baird Ultra i.e., Baird Ultra and Frost Kempner go up and down completely randomly.
Pair Corralation between Baird Ultra and Frost Kempner
Assuming the 90 days horizon Baird Ultra is expected to generate 1.54 times less return on investment than Frost Kempner. But when comparing it to its historical volatility, Baird Ultra Short is 2.88 times less risky than Frost Kempner. It trades about 0.42 of its potential returns per unit of risk. Frost Kempner Treasury is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 834.00 in Frost Kempner Treasury on December 27, 2024 and sell it today you would earn a total of 14.00 from holding Frost Kempner Treasury or generate 1.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Baird Ultra Short vs. Frost Kempner Treasury
Performance |
Timeline |
Baird Ultra Short |
Frost Kempner Treasury |
Baird Ultra and Frost Kempner Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baird Ultra and Frost Kempner
The main advantage of trading using opposite Baird Ultra and Frost Kempner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Ultra position performs unexpectedly, Frost Kempner 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 Frost Kempner will offset losses from the drop in Frost Kempner's long position.Baird Ultra vs. Baird Short Term Bond | Baird Ultra vs. Frost Low Duration | Baird Ultra vs. American Funds Inflation | Baird Ultra vs. Baird Aggregate Bond |
Frost Kempner vs. Fidelity Freedom 2015 | Frost Kempner vs. Fidelity Puritan Fund | Frost Kempner vs. Fidelity Puritan Fund | Frost Kempner vs. Fidelity Pennsylvania Municipal |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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