Correlation Between Firsthand Technology and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Firsthand Technology 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 Firsthand Technology and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Technology Opportunities and Baillie Gifford International, you can compare the effects of market volatilities on Firsthand Technology 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 Firsthand Technology with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Technology and Baillie Gifford.
Diversification Opportunities for Firsthand Technology and Baillie Gifford
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Firsthand and Baillie is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Technology Opportuni and Baillie Gifford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Inte and Firsthand Technology 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 Firsthand Technology Opportunities 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 Inte has no effect on the direction of Firsthand Technology i.e., Firsthand Technology and Baillie Gifford go up and down completely randomly.
Pair Corralation between Firsthand Technology and Baillie Gifford
Assuming the 90 days horizon Firsthand Technology Opportunities is expected to under-perform the Baillie Gifford. In addition to that, Firsthand Technology is 1.27 times more volatile than Baillie Gifford International. It trades about -0.03 of its total potential returns per unit of risk. Baillie Gifford International is currently generating about 0.08 per unit of volatility. If you would invest 637.00 in Baillie Gifford International on September 4, 2024 and sell it today you would earn a total of 165.00 from holding Baillie Gifford International or generate 25.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Firsthand Technology Opportuni vs. Baillie Gifford International
Performance |
| Timeline |
| Firsthand Technology |
| Baillie Gifford Inte |
Firsthand Technology and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Technology and Baillie Gifford
The main advantage of trading using opposite Firsthand Technology and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Technology 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.| Firsthand Technology vs. Berkshire Focus | Firsthand Technology vs. Red Oak Technology | Firsthand Technology vs. Jacob Internet Fund | Firsthand Technology vs. Kinetics Internet Fund |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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