Correlation Between American Balanced and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both American Balanced 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 American Balanced and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Baillie Gifford China, you can compare the effects of market volatilities on American Balanced 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 American Balanced with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Baillie Gifford.
Diversification Opportunities for American Balanced and Baillie Gifford
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Baillie is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Baillie Gifford China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford China and American Balanced 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 American Balanced 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 China has no effect on the direction of American Balanced i.e., American Balanced and Baillie Gifford go up and down completely randomly.
Pair Corralation between American Balanced and Baillie Gifford
Assuming the 90 days horizon American Balanced is expected to generate 1.98 times less return on investment than Baillie Gifford. But when comparing it to its historical volatility, American Balanced is 2.73 times less risky than Baillie Gifford. It trades about 0.07 of its potential returns per unit of risk. Baillie Gifford China is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 780.00 in Baillie Gifford China on November 3, 2024 and sell it today you would earn a total of 122.00 from holding Baillie Gifford China or generate 15.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.02% |
| Values | Daily Returns |
American Balanced vs. Baillie Gifford China
Performance |
| Timeline |
| American Balanced |
| Baillie Gifford China |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Balanced and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Baillie Gifford
The main advantage of trading using opposite American Balanced and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced 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.| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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