Correlation Between Capital World and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Capital World 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 Capital World and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Bond and Baillie Gifford Health, you can compare the effects of market volatilities on Capital World 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 Capital World with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Baillie Gifford.
Diversification Opportunities for Capital World and Baillie Gifford
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Baillie is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Bond and Baillie Gifford Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Health and Capital World 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 Capital World Bond 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 Health has no effect on the direction of Capital World i.e., Capital World and Baillie Gifford go up and down completely randomly.
Pair Corralation between Capital World and Baillie Gifford
Assuming the 90 days horizon Capital World Bond is expected to generate 0.12 times more return on investment than Baillie Gifford. However, Capital World Bond is 8.39 times less risky than Baillie Gifford. It trades about 0.07 of its potential returns per unit of risk. Baillie Gifford Health is currently generating about -0.03 per unit of risk. If you would invest 1,607 in Capital World Bond on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Capital World Bond or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Bond vs. Baillie Gifford Health
Performance |
| Timeline |
| Capital World Bond |
| Baillie Gifford Health |
Capital World and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Baillie Gifford
The main advantage of trading using opposite Capital World and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World 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.| Capital World vs. Baillie Gifford Health | Capital World vs. Invesco Global Health | Capital World vs. Allianzgi Health Sciences | Capital World vs. The Gabelli Healthcare |
| Baillie Gifford vs. Lord Abbett Diversified | Baillie Gifford vs. Federated Hermes Conservative | Baillie Gifford vs. Western Asset Diversified | Baillie Gifford vs. Global Diversified Income |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |