Correlation Between Aberdeen Australia and Baird Short-term

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

By analyzing existing cross correlation between Aberdeen Australia Equity and Baird Short Term Municipal, you can compare the effects of market volatilities on Aberdeen Australia and Baird Short-term 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 Aberdeen Australia with a short position of Baird Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Australia and Baird Short-term.

Diversification Opportunities for Aberdeen Australia and Baird Short-term

-0.41

Correlation Coefficient

Aberdeen Australia  Baird Short-term

Very good diversification

The 3 months correlation between Aberdeen and Baird is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Australia Equity and Baird Short Term Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Short Term and Aberdeen Australia 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 Aberdeen Australia Equity are associated (or correlated) with Baird Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Short Term has no effect on the direction of Aberdeen Australia i.e., Aberdeen Australia and Baird Short-term go up and down completely randomly.

Pair Corralation between Aberdeen Australia and Baird Short-term

Assuming the 90 days horizon Aberdeen Australia Equity is expected to under-perform the Baird Short-term. In addition to that, Aberdeen Australia is 16.07 times more volatile than Baird Short Term Municipal. It trades about -0.07 of its total potential returns per unit of risk. Baird Short Term Municipal is currently generating about 0.26 per unit of volatility. If you would invest  989.00  in Baird Short Term Municipal on December 21, 2024 and sell it today you would earn a total of  12.00  from holding Baird Short Term Municipal or generate 1.21% return on investment over 90 days.

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

Aberdeen Australia Equity  vs.  Baird Short Term Municipal

Aberdeen Australia Equity

Risk-Adjusted Performance

Very Weak

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

Baird Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baird Short Term Municipal are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Baird Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aberdeen Australia and Baird Short-term

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

The idea behind Aberdeen Australia Equity and Baird Short Term Municipal 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.