Correlation Between Kopernik Global and Baird Intermediate

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

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

Diversification Opportunities for Kopernik Global and Baird Intermediate

0.23

Correlation Coefficient

Kopernik Global  Baird Intermediate

Modest diversification

The 3 months correlation between Kopernik and Baird is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kopernik Global All Cap 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 Kopernik Global 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 Kopernik Global All Cap 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 Kopernik Global i.e., Kopernik Global and Baird Intermediate go up and down completely randomly.

Pair Corralation between Kopernik Global and Baird Intermediate

Assuming the 90 days horizon Kopernik Global is expected to generate 1.59 times less return on investment than Baird Intermediate. In addition to that, Kopernik Global is 3.42 times more volatile than Baird Intermediate Bond. It trades about 0.01 of its total potential returns per unit of risk. Baird Intermediate Bond is currently generating about 0.05 per unit of volatility. If you would invest  1,032  in Baird Intermediate Bond on September 16, 2024 and sell it today you would earn a total of  2.00  from holding Baird Intermediate Bond or generate 0.19% return on investment over 90 days.

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

Kopernik Global All Cap  vs.  Baird Intermediate Bond

Kopernik Global All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kopernik Global All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Kopernik Global 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 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 Kopernik Global and Baird Intermediate

The main advantage of trading using opposite Kopernik Global and Baird Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kopernik Global 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 Kopernik Global All Cap 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.