Correlation Between American Funds and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both American Funds 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 Funds 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 Funds Fundamental and Baillie Gifford Emerging, you can compare the effects of market volatilities on American Funds 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 Funds with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Baillie Gifford.
Diversification Opportunities for American Funds and Baillie Gifford
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Baillie is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Baillie Gifford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Emerging and American Funds 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 Funds Fundamental 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 Emerging has no effect on the direction of American Funds i.e., American Funds and Baillie Gifford go up and down completely randomly.
Pair Corralation between American Funds and Baillie Gifford
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.91 times more return on investment than Baillie Gifford. However, American Funds Fundamental is 1.1 times less risky than Baillie Gifford. It trades about 0.14 of its potential returns per unit of risk. Baillie Gifford Emerging is currently generating about 0.09 per unit of risk. If you would invest 8,194 in American Funds Fundamental on November 4, 2024 and sell it today you would earn a total of 224.00 from holding American Funds Fundamental or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Baillie Gifford Emerging
Performance |
| Timeline |
| American Funds Funda |
| Baillie Gifford Emerging |
American Funds and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Baillie Gifford
The main advantage of trading using opposite American Funds and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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 Funds vs. World Energy Fund | American Funds vs. Energy Services Fund | American Funds vs. Alpsalerian Energy Infrastructure | American Funds vs. Icon Natural Resources |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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