Correlation Between Baillie Gifford and Prudential Health
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Prudential 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 Prudential 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 Prudential Health Sciences, you can compare the effects of market volatilities on Baillie Gifford and Prudential 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 Prudential Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Prudential Health.
Diversification Opportunities for Baillie Gifford and Prudential Health
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baillie and Prudential is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Prudential Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Health 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 Prudential Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Health has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Prudential Health go up and down completely randomly.
Pair Corralation between Baillie Gifford and Prudential Health
Assuming the 90 days horizon Baillie Gifford Health is expected to under-perform the Prudential Health. In addition to that, Baillie Gifford is 1.23 times more volatile than Prudential Health Sciences. It trades about -0.03 of its total potential returns per unit of risk. Prudential Health Sciences is currently generating about 0.02 per unit of volatility. If you would invest 3,937 in Prudential Health Sciences on August 24, 2024 and sell it today you would earn a total of 62.00 from holding Prudential Health Sciences or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Health vs. Prudential Health Sciences
Performance |
| Timeline |
| Baillie Gifford Health |
| Prudential Health |
Baillie Gifford and Prudential Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Prudential Health
The main advantage of trading using opposite Baillie Gifford and Prudential Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Prudential 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 Prudential Health will offset losses from the drop in Prudential Health's long position.| Baillie Gifford vs. Mutual Of America | Baillie Gifford vs. Palm Valley Capital | Baillie Gifford vs. Boston Partners Small | Baillie Gifford vs. Mid Cap Value Profund |
| Prudential Health vs. Growth Income Fund | Prudential Health vs. Sentinel Small Pany | Prudential Health vs. Issachar Fund Class | Prudential Health vs. Omni Small Cap Value |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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