Correlation Between Health Care and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Health Care 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 Health Care and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Fund and Baillie Gifford Health, you can compare the effects of market volatilities on Health Care 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 Health Care with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Baillie Gifford.
Diversification Opportunities for Health Care and Baillie Gifford
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HEALTH and Baillie is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Baillie Gifford Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Health and Health Care 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 Health Care Fund 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 Health has no effect on the direction of Health Care i.e., Health Care and Baillie Gifford go up and down completely randomly.
Pair Corralation between Health Care and Baillie Gifford
Assuming the 90 days horizon Health Care Fund is expected to generate 0.57 times more return on investment than Baillie Gifford. However, Health Care Fund is 1.74 times less risky than Baillie Gifford. It trades about 0.03 of its potential returns per unit of risk. Baillie Gifford Health is currently generating about -0.02 per unit of risk. If you would invest 2,750 in Health Care Fund on November 1, 2024 and sell it today you would earn a total of 286.00 from holding Health Care Fund or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Fund vs. Baillie Gifford Health
Performance |
| Timeline |
| Health Care Fund |
| Baillie Gifford Health |
Health Care and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Baillie Gifford
The main advantage of trading using opposite Health Care and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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.| Health Care vs. Ab Bond Inflation | Health Care vs. Blrc Sgy Mnp | Health Care vs. Doubleline Total Return | Health Care vs. Rbc Ultra Short Fixed |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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