Correlation Between Baillie Gifford and Baron Health
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Baron Health 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 Baillie Gifford and Baron Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford Health and Baron Health Care, you can compare the effects of market volatilities on Baillie Gifford and Baron Health 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 Baillie Gifford with a short position of Baron Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Baron Health.
Diversification Opportunities for Baillie Gifford and Baron Health
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baillie and Baron is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Baron Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Health Care and Baillie Gifford 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 Baillie Gifford Health are associated (or correlated) with Baron Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Health Care has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Baron Health go up and down completely randomly.
Pair Corralation between Baillie Gifford and Baron Health
Assuming the 90 days horizon Baillie Gifford Health is expected to under-perform the Baron Health. In addition to that, Baillie Gifford is 1.56 times more volatile than Baron Health Care. It trades about -0.03 of its total potential returns per unit of risk. Baron Health Care is currently generating about 0.03 per unit of volatility. If you would invest 1,796 in Baron Health Care on August 27, 2024 and sell it today you would earn a total of 237.00 from holding Baron Health Care or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Health vs. Baron Health Care
Performance |
| Timeline |
| Baillie Gifford Health |
| Baron Health Care |
Baillie Gifford and Baron Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Baron Health
The main advantage of trading using opposite Baillie Gifford and Baron Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Baron Health 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 Baron Health will offset losses from the drop in Baron Health's long position.| Baillie Gifford vs. Calamos Dynamic Convertible | Baillie Gifford vs. Allianzgi Vertible Fund | Baillie Gifford vs. Allianzgi Convertible Income | Baillie Gifford vs. Invesco Vertible Securities |
| Baron Health vs. Alger Health Sciences | Baron Health vs. Baillie Gifford Health | Baron Health vs. Allianzgi Health Sciences | Baron Health vs. Fidelity Advisor Health |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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