Correlation Between Baillie Gifford and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Dow Jones 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 Baillie Gifford and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford Global and Dow Jones Industrial, you can compare the effects of market volatilities on Baillie Gifford and Dow Jones 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 Baillie Gifford with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Dow Jones.
Diversification Opportunities for Baillie Gifford and Dow Jones
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baillie and Dow is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Global and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Baillie Gifford 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 Baillie Gifford Global are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Dow Jones go up and down completely randomly.
Pair Corralation between Baillie Gifford and Dow Jones
Assuming the 90 days horizon Baillie Gifford is expected to generate 1.36 times less return on investment than Dow Jones. In addition to that, Baillie Gifford is 1.03 times more volatile than Dow Jones Industrial. It trades about 0.14 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of volatility. If you would invest 4,093,693 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 397,372 from holding Dow Jones Industrial or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Global vs. Dow Jones Industrial
Performance |
| Timeline |
Baillie Gifford and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Baillie Gifford Global
Pair trading matchups for Baillie Gifford
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Baillie Gifford and Dow Jones
The main advantage of trading using opposite Baillie Gifford and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Baillie Gifford vs. The Eafe Pure | Baillie Gifford vs. The Long Term | Baillie Gifford vs. Baillie Gifford International | Baillie Gifford vs. Baillie Gifford International |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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