Correlation Between Heartland Value and Baird Intermediate

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

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

Diversification Opportunities for Heartland Value and Baird Intermediate

-0.3

Correlation Coefficient

Heartland Value  Baird Intermediate

Very good diversification

The 3 months correlation between Heartland and Baird is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus 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 Heartland Value 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 Heartland Value Plus 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 Heartland Value i.e., Heartland Value and Baird Intermediate go up and down completely randomly.

Pair Corralation between Heartland Value and Baird Intermediate

Assuming the 90 days horizon Heartland Value Plus is expected to under-perform the Baird Intermediate. In addition to that, Heartland Value is 6.35 times more volatile than Baird Intermediate Bond. It trades about -0.1 of its total potential returns per unit of risk. Baird Intermediate Bond is currently generating about 0.22 per unit of volatility. If you would invest  1,019  in Baird Intermediate Bond on December 21, 2024 and sell it today you would earn a total of  24.00  from holding Baird Intermediate Bond or generate 2.36% return on investment over 90 days.

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

Heartland Value Plus  vs.  Baird Intermediate Bond

Heartland Value Plus

Risk-Adjusted Performance

Very Weak

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

Baird Intermediate Bond

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baird Intermediate Bond are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Heartland Value and Baird Intermediate

The main advantage of trading using opposite Heartland Value and Baird Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value 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 Heartland Value Plus 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.