Correlation Between Pear Tree and Bridge Builder
Can any of the company-specific risk be diversified away by investing in both Pear Tree and Bridge Builder 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 Pear Tree and Bridge Builder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pear Tree Polaris and Bridge Builder E, you can compare the effects of market volatilities on Pear Tree and Bridge Builder 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 Pear Tree with a short position of Bridge Builder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and Bridge Builder.
Diversification Opportunities for Pear Tree and Bridge Builder
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pear and Bridge is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Polaris and Bridge Builder E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder E and Pear Tree 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 Pear Tree Polaris are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder E has no effect on the direction of Pear Tree i.e., Pear Tree and Bridge Builder go up and down completely randomly.
Pair Corralation between Pear Tree and Bridge Builder
Assuming the 90 days horizon Pear Tree Polaris is expected to under-perform the Bridge Builder. In addition to that, Pear Tree is 2.2 times more volatile than Bridge Builder E. It trades about -0.21 of its total potential returns per unit of risk. Bridge Builder E is currently generating about 0.1 per unit of volatility. If you would invest 876.00 in Bridge Builder E on August 30, 2024 and sell it today you would earn a total of 7.00 from holding Bridge Builder E or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pear Tree Polaris vs. Bridge Builder E
Performance |
| Timeline |
| Pear Tree Polaris |
| Bridge Builder E |
Pear Tree and Bridge Builder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pear Tree and Bridge Builder
The main advantage of trading using opposite Pear Tree and Bridge Builder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pear Tree position performs unexpectedly, Bridge Builder 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 Bridge Builder will offset losses from the drop in Bridge Builder's long position.| Pear Tree vs. Pear Tree Polaris | Pear Tree vs. Seafarer Overseas Growth | Pear Tree vs. International Fund International | Pear Tree vs. Lazard Global Listed |
| Bridge Builder vs. Oklahoma College Savings | Bridge Builder vs. The Hartford Inflation | Bridge Builder vs. Lord Abbett Inflation | Bridge Builder vs. Goldman Sachs Inflation |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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