Correlation Between Tortoise Energy and Baird Midcap

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

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

Diversification Opportunities for Tortoise Energy and Baird Midcap

0.85

Correlation Coefficient

Tortoise Energy  Baird Midcap

Very poor diversification

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

Pair Corralation between Tortoise Energy and Baird Midcap

Assuming the 90 days horizon Tortoise Energy Independence is expected to generate 1.39 times more return on investment than Baird Midcap. However, Tortoise Energy is 1.39 times more volatile than Baird Midcap Fund. It trades about 0.33 of its potential returns per unit of risk. Baird Midcap Fund is currently generating about 0.35 per unit of risk. If you would invest  4,048  in Tortoise Energy Independence on September 5, 2024 and sell it today you would earn a total of  377.00  from holding Tortoise Energy Independence or generate 9.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Tortoise Energy Independence  vs.  Baird Midcap Fund

Tortoise Energy Inde

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Energy Independence are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tortoise Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Baird Midcap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baird Midcap Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baird Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tortoise Energy and Baird Midcap

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

The idea behind Tortoise Energy Independence and Baird Midcap Fund 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.