Correlation Between Scandic Hotels and Baillie Gifford

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

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

Diversification Opportunities for Scandic Hotels and Baillie Gifford

0.96

Correlation Coefficient

Scandic Hotels  Baillie Gifford

Almost no diversification

The 3 months correlation between Scandic and Baillie is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group 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 Scandic Hotels 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 Scandic Hotels Group 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 Scandic Hotels i.e., Scandic Hotels and Baillie Gifford go up and down completely randomly.

Pair Corralation between Scandic Hotels and Baillie Gifford

Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 1.34 times more return on investment than Baillie Gifford. However, Scandic Hotels is 1.34 times more volatile than Baillie Gifford European. It trades about 0.15 of its potential returns per unit of risk. Baillie Gifford European is currently generating about 0.19 per unit of risk. If you would invest  6,768  in Scandic Hotels Group on December 23, 2024 and sell it today you would earn a total of  1,000.00  from holding Scandic Hotels Group or generate 14.78% return on investment over 90 days.

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

Scandic Hotels Group  vs.  Baillie Gifford European

Scandic Hotels Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Scandic Hotels Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Scandic Hotels unveiled solid returns over the last few months and may actually be approaching a breakup point.

Baillie Gifford European

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford European are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Baillie Gifford unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandic Hotels and Baillie Gifford

The main advantage of trading using opposite Scandic Hotels and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels 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 Scandic Hotels Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.