Correlation Between PCI PAL and Baillie Gifford

Can any of the company-specific risk be diversified away by investing in both PCI PAL 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 PCI PAL and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PCI PAL PLC and Baillie Gifford European, you can compare the effects of market volatilities on PCI PAL 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 PCI PAL with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCI PAL and Baillie Gifford.

Diversification Opportunities for PCI PAL and Baillie Gifford

-0.65

Correlation Coefficient

PCI PAL  Baillie Gifford

Excellent diversification

The 3 months correlation between PCI and Baillie is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding PCI PAL PLC and Baillie Gifford European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford European and PCI PAL 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 PCI PAL PLC 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 European has no effect on the direction of PCI PAL i.e., PCI PAL and Baillie Gifford go up and down completely randomly.

Pair Corralation between PCI PAL and Baillie Gifford

Assuming the 90 days trading horizon PCI PAL PLC is expected to generate 2.87 times more return on investment than Baillie Gifford. However, PCI PAL is 2.87 times more volatile than Baillie Gifford European. It trades about 0.08 of its potential returns per unit of risk. Baillie Gifford European is currently generating about -0.13 per unit of risk. If you would invest  5,800  in PCI PAL PLC on August 30, 2024 and sell it today you would earn a total of  800.00  from holding PCI PAL PLC or generate 13.79% return on investment over 90 days.

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

PCI PAL PLC  vs.  Baillie Gifford European

PCI PAL PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PCI PAL PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, PCI PAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Baillie Gifford European

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baillie Gifford European has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PCI PAL and Baillie Gifford

The main advantage of trading using opposite PCI PAL and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCI PAL 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.

The idea behind PCI PAL PLC and Baillie Gifford European 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.