Correlation Between Baird E and Baird Ultra

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

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

Diversification Opportunities for Baird E and Baird Ultra

0.85

Correlation Coefficient

Baird E  Baird Ultra

Very poor diversification

The 3 months correlation between Baird and Baird is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Baird E Intermediate and Baird Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Ultra Short and Baird E 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 Baird E Intermediate are associated (or correlated) with Baird Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Ultra Short has no effect on the direction of Baird E i.e., Baird E and Baird Ultra go up and down completely randomly.

Pair Corralation between Baird E and Baird Ultra

Assuming the 90 days horizon Baird E Intermediate is expected to generate 1.43 times more return on investment than Baird Ultra. However, Baird E is 1.43 times more volatile than Baird Ultra Short. It trades about 0.14 of its potential returns per unit of risk. Baird Ultra Short is currently generating about 0.18 per unit of risk. If you would invest  1,010  in Baird E Intermediate on May 7, 2025 and sell it today you would earn a total of  8.00  from holding Baird E Intermediate or generate 0.79% return on investment over 90 days.

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

Baird E Intermediate  vs.  Baird Ultra Short

Baird E Intermediate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baird E Intermediate are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Baird E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baird Ultra Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baird Ultra Short are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Baird Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Baird E and Baird Ultra

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

The idea behind Baird E Intermediate and Baird Ultra Short 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.