Correlation Between Eagle Mid and Baird Small/mid

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

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

Diversification Opportunities for Eagle Mid and Baird Small/mid

0.9

Correlation Coefficient

Eagle Mid  Baird Small/mid

Almost no diversification

The 3 months correlation between Eagle and Baird is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Mid Cap and Baird Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Smallmid Cap and Eagle 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 Eagle Mid Cap are associated (or correlated) with Baird Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Smallmid Cap has no effect on the direction of Eagle Mid i.e., Eagle Mid and Baird Small/mid go up and down completely randomly.

Pair Corralation between Eagle Mid and Baird Small/mid

Assuming the 90 days horizon Eagle Mid Cap is expected to under-perform the Baird Small/mid. In addition to that, Eagle Mid is 1.39 times more volatile than Baird Smallmid Cap. It trades about -0.02 of its total potential returns per unit of risk. Baird Smallmid Cap is currently generating about 0.08 per unit of volatility. If you would invest  1,513  in Baird Smallmid Cap on October 4, 2024 and sell it today you would earn a total of  181.00  from holding Baird Smallmid Cap or generate 11.96% return on investment over 90 days.

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

Eagle Mid Cap  vs.  Baird Smallmid Cap

Eagle Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Baird Smallmid Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baird Smallmid Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Baird Small/mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eagle Mid and Baird Small/mid

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

The idea behind Eagle Mid Cap and Baird Smallmid Cap 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.