Correlation Between Baillie Gifford and International Equity
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and International Equity 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 International Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford Emerging and The International Equity, you can compare the effects of market volatilities on Baillie Gifford and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and International Equity.
Diversification Opportunities for Baillie Gifford and International Equity
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baillie and International is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Emerging and The International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The International Equity 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 Emerging are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The International Equity has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and International Equity go up and down completely randomly.
Pair Corralation between Baillie Gifford and International Equity
Assuming the 90 days horizon Baillie Gifford Emerging is expected to under-perform the International Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baillie Gifford Emerging is 1.03 times less risky than International Equity. The mutual fund trades about -0.09 of its potential returns per unit of risk. The The International Equity is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,422 in The International Equity on October 31, 2024 and sell it today you would lose (90.00) from holding The International Equity or give up 6.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Emerging vs. The International Equity
Performance |
| Timeline |
| Baillie Gifford Emerging |
| The International Equity |
Baillie Gifford and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and International Equity
The main advantage of trading using opposite Baillie Gifford and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.| Baillie Gifford vs. Absolute Convertible Arbitrage | Baillie Gifford vs. Columbia Convertible Securities | Baillie Gifford vs. Fidelity Sai Convertible | Baillie Gifford vs. Virtus Convertible |
| International Equity vs. The Eafe Pure | International Equity vs. The Long Term | International Equity vs. Baillie Gifford International | International Equity vs. Baillie Gifford International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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