Correlation Between Baron Health and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Baron Health and Baillie Gifford 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 Baron Health and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Health Care and Baillie Gifford Global, you can compare the effects of market volatilities on Baron Health and Baillie Gifford 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 Baron Health with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Baillie Gifford.
Diversification Opportunities for Baron Health and Baillie Gifford
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Baron and Baillie is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care and Baillie Gifford Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Global and Baron Health 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 Baron Health Care are associated (or correlated) with Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Global has no effect on the direction of Baron Health i.e., Baron Health and Baillie Gifford go up and down completely randomly.
Pair Corralation between Baron Health and Baillie Gifford
Assuming the 90 days horizon Baron Health Care is expected to generate 0.39 times more return on investment than Baillie Gifford. However, Baron Health Care is 2.53 times less risky than Baillie Gifford. It trades about 0.19 of its potential returns per unit of risk. Baillie Gifford Global is currently generating about -0.13 per unit of risk. If you would invest 1,958 in Baron Health Care on October 25, 2024 and sell it today you would earn a total of 57.00 from holding Baron Health Care or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Baillie Gifford Global
Performance |
| Timeline |
| Baron Health Care |
| Baillie Gifford Global |
Baron Health and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Baillie Gifford
The main advantage of trading using opposite Baron Health and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health position performs unexpectedly, Baillie Gifford 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 Baillie Gifford will offset losses from the drop in Baillie Gifford's long position.| Baron Health vs. Blackrock Financial Institutions | Baron Health vs. John Hancock Financial | Baron Health vs. Financials Ultrasector Profund | Baron Health vs. T Rowe Price |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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