Correlation Between Baillie Gifford and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Pear Tree 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 Pear Tree 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 Pear Tree Polaris, you can compare the effects of market volatilities on Baillie Gifford and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Pear Tree.
Diversification Opportunities for Baillie Gifford and Pear Tree
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baillie and Pear is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Pear Tree go up and down completely randomly.
Pair Corralation between Baillie Gifford and Pear Tree
Assuming the 90 days horizon Baillie Gifford Health is expected to generate 1.7 times more return on investment than Pear Tree. However, Baillie Gifford is 1.7 times more volatile than Pear Tree Polaris. It trades about 0.03 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about 0.03 per unit of risk. If you would invest 545.00 in Baillie Gifford Health on September 4, 2024 and sell it today you would earn a total of 38.00 from holding Baillie Gifford Health or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Baillie Gifford Health vs. Pear Tree Polaris
Performance |
| Timeline |
| Baillie Gifford Health |
| Pear Tree Polaris |
Baillie Gifford and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Pear Tree
The main advantage of trading using opposite Baillie Gifford and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Baillie Gifford vs. T Rowe Price | Baillie Gifford vs. T Rowe Price | Baillie Gifford vs. Cs 607 Tax | Baillie Gifford vs. Franklin High Yield |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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