Correlation Between Energy Fund and Baird E

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

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

Diversification Opportunities for Energy Fund and Baird E

0.77

Correlation Coefficient

Energy Fund  Baird E

Poor diversification

The 3 months correlation between Energy and Baird is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fund Class and Baird E Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird E Intermediate and Energy Fund 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 Energy Fund Class are associated (or correlated) with Baird E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird E Intermediate has no effect on the direction of Energy Fund i.e., Energy Fund and Baird E go up and down completely randomly.

Pair Corralation between Energy Fund and Baird E

Assuming the 90 days horizon Energy Fund Class is expected to generate 12.83 times more return on investment than Baird E. However, Energy Fund is 12.83 times more volatile than Baird E Intermediate. It trades about 0.13 of its potential returns per unit of risk. Baird E Intermediate is currently generating about 0.17 per unit of risk. If you would invest  16,738  in Energy Fund Class on May 6, 2025 and sell it today you would earn a total of  1,594  from holding Energy Fund Class or generate 9.52% return on investment over 90 days.

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

Energy Fund Class  vs.  Baird E Intermediate

Energy Fund Class

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Fund Class are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Energy Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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 13 (%) 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.

Pair Trading with Energy Fund and Baird E

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

The idea behind Energy Fund Class and Baird E Intermediate 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.