Correlation Between Pear Tree and William Blair

Can any of the company-specific risk be diversified away by investing in both Pear Tree and William Blair 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 William Blair into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pear Tree Essex and William Blair Growth, you can compare the effects of market volatilities on Pear Tree and William Blair 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 William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pear Tree and William Blair.

Diversification Opportunities for Pear Tree and William Blair

0.86

Correlation Coefficient

Pear Tree  William Blair

Very poor diversification

The 3 months correlation between Pear and WILLIAM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pear Tree Essex and William Blair Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Growth 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 Essex are associated (or correlated) with William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Growth has no effect on the direction of Pear Tree i.e., Pear Tree and William Blair go up and down completely randomly.

Pair Corralation between Pear Tree and William Blair

Assuming the 90 days horizon Pear Tree is expected to generate 2.0 times less return on investment than William Blair. In addition to that, Pear Tree is 1.26 times more volatile than William Blair Growth. It trades about 0.14 of its total potential returns per unit of risk. William Blair Growth is currently generating about 0.35 per unit of volatility. If you would invest  1,137  in William Blair Growth on September 4, 2024 and sell it today you would earn a total of  81.00  from holding William Blair Growth or generate 7.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Pear Tree Essex  vs.  William Blair Growth

Pear Tree Essex

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pear Tree Essex are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pear Tree may actually be approaching a critical reversion point that can send shares even higher in January 2025.

William Blair Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, William Blair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pear Tree and William Blair

The main advantage of trading using opposite Pear Tree and William Blair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pear Tree position performs unexpectedly, William Blair 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 William Blair will offset losses from the drop in William Blair's long position.

The idea behind Pear Tree Essex and William Blair Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.