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 Smallmid, 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
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pear and Bridge is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Polaris and Bridge Builder Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Smallmid 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 Smallmid 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. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pear Tree Polaris is 1.5 times less risky than Bridge Builder. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Bridge Builder Smallmid is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,598 in Bridge Builder Smallmid on August 30, 2024 and sell it today you would earn a total of 130.00 from holding Bridge Builder Smallmid or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pear Tree Polaris vs. Bridge Builder Smallmid
Performance |
| Timeline |
| Pear Tree Polaris |
| Bridge Builder Smallmid |
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. Bridge Builder E | Bridge Builder vs. Bridge Builder Large | Bridge Builder vs. Bridge Builder International | Bridge Builder vs. Bridge Builder Municipal |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |