Correlation Between Sierra Tactical and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Sierra Tactical 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 Sierra Tactical and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra Tactical Municipal and Baillie Gifford Health, you can compare the effects of market volatilities on Sierra Tactical 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 Sierra Tactical with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Tactical and Baillie Gifford.
Diversification Opportunities for Sierra Tactical and Baillie Gifford
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sierra and Baillie is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sierra Tactical Municipal 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 Sierra Tactical 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 Sierra Tactical Municipal 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 Sierra Tactical i.e., Sierra Tactical and Baillie Gifford go up and down completely randomly.
Pair Corralation between Sierra Tactical and Baillie Gifford
Assuming the 90 days horizon Sierra Tactical Municipal is expected to generate 0.21 times more return on investment than Baillie Gifford. However, Sierra Tactical Municipal is 4.68 times less risky than Baillie Gifford. It trades about 0.1 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 2,505 in Sierra Tactical Municipal on September 1, 2024 and sell it today you would earn a total of 82.00 from holding Sierra Tactical Municipal or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Sierra Tactical Municipal vs. Baillie Gifford Health
Performance |
| Timeline |
| Sierra Tactical Municipal |
| Baillie Gifford Health |
Sierra Tactical and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Tactical and Baillie Gifford
The main advantage of trading using opposite Sierra Tactical and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Tactical 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.| Sierra Tactical vs. Sierra Tactical Risk | Sierra Tactical vs. Sierra Tactical Risk | Sierra Tactical vs. Sierra Tactical Risk | Sierra Tactical vs. Sierra Tactical Risk |
| Baillie Gifford vs. The Eafe Pure | Baillie Gifford vs. The Long Term | Baillie Gifford vs. Baillie Gifford International | Baillie Gifford vs. Baillie Gifford International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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