Correlation Between American Funds and Baird Intermediate

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

By analyzing existing cross correlation between American Funds Developing and Baird Intermediate Bond, you can compare the effects of market volatilities on American Funds and Baird Intermediate 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 American Funds with a short position of Baird Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Baird Intermediate.

Diversification Opportunities for American Funds and Baird Intermediate

0.0

Correlation Coefficient

American Funds  Baird Intermediate

Pay attention - limited upside

The 3 months correlation between American and Baird is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Developing and Baird Intermediate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Intermediate Bond and American Funds 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 American Funds Developing are associated (or correlated) with Baird Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Intermediate Bond has no effect on the direction of American Funds i.e., American Funds and Baird Intermediate go up and down completely randomly.

Pair Corralation between American Funds and Baird Intermediate

If you would invest (100.00) in American Funds Developing on October 4, 2024 and sell it today you would earn a total of  100.00  from holding American Funds Developing or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

American Funds Developing  vs.  Baird Intermediate Bond

American Funds Developing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Baird Intermediate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with American Funds and Baird Intermediate

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

The idea behind American Funds Developing and Baird Intermediate Bond 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.