Correlation Between Prosiebensat and Baillie Gifford

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

By analyzing existing cross correlation between Prosiebensat 1 Media and Baillie Gifford European, you can compare the effects of market volatilities on Prosiebensat 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 Prosiebensat with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and Baillie Gifford.

Diversification Opportunities for Prosiebensat and Baillie Gifford

0.6

Correlation Coefficient

Prosiebensat  Baillie Gifford

Poor diversification

The 3 months correlation between Prosiebensat and Baillie is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media 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 Prosiebensat 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 Prosiebensat 1 Media 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 Prosiebensat i.e., Prosiebensat and Baillie Gifford go up and down completely randomly.

Pair Corralation between Prosiebensat and Baillie Gifford

Assuming the 90 days trading horizon Prosiebensat is expected to generate 11.04 times less return on investment than Baillie Gifford. In addition to that, Prosiebensat is 2.19 times more volatile than Baillie Gifford European. It trades about 0.01 of its total potential returns per unit of risk. Baillie Gifford European is currently generating about 0.35 per unit of volatility. If you would invest  8,474  in Baillie Gifford European on October 25, 2024 and sell it today you would earn a total of  496.00  from holding Baillie Gifford European or generate 5.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Prosiebensat 1 Media  vs.  Baillie Gifford European

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Baillie Gifford European

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford European are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Baillie Gifford is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Prosiebensat and Baillie Gifford

The main advantage of trading using opposite Prosiebensat and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat 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 Prosiebensat 1 Media 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.