Correlation Between Baillie Gifford and Global Alpha
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Global Alpha 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 Global Alpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford China and The Global Alpha, you can compare the effects of market volatilities on Baillie Gifford and Global Alpha 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 Global Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Global Alpha.
Diversification Opportunities for Baillie Gifford and Global Alpha
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baillie and Global is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford China and The Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Alpha 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 China are associated (or correlated) with Global Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Alpha has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Global Alpha go up and down completely randomly.
Pair Corralation between Baillie Gifford and Global Alpha
Assuming the 90 days horizon Baillie Gifford China is expected to under-perform the Global Alpha. In addition to that, Baillie Gifford is 2.19 times more volatile than The Global Alpha. It trades about -0.18 of its total potential returns per unit of risk. The Global Alpha is currently generating about 0.06 per unit of volatility. If you would invest 1,812 in The Global Alpha on August 27, 2024 and sell it today you would earn a total of 18.00 from holding The Global Alpha or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford China vs. The Global Alpha
Performance |
| Timeline |
| Baillie Gifford China |
| Global Alpha |
Baillie Gifford and Global Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Global Alpha
The main advantage of trading using opposite Baillie Gifford and Global Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Global Alpha 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 Global Alpha will offset losses from the drop in Global Alpha's 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 |
| Global Alpha vs. The Eafe Pure | Global Alpha vs. Baillie Gifford International | Global Alpha vs. Baillie Gifford International | Global Alpha vs. Baillie Gifford China |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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