Correlation Between Baillie Gifford and International Smaller
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and International Smaller 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 Smaller 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 Smaller, you can compare the effects of market volatilities on Baillie Gifford and International Smaller 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 Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and International Smaller.
Diversification Opportunities for Baillie Gifford and International Smaller
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baillie and International is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Emerging and The International Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The International Smaller 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 Smaller. 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 Smaller has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and International Smaller go up and down completely randomly.
Pair Corralation between Baillie Gifford and International Smaller
Assuming the 90 days horizon Baillie Gifford Emerging is expected to generate 1.53 times more return on investment than International Smaller. However, Baillie Gifford is 1.53 times more volatile than The International Smaller. It trades about -0.16 of its potential returns per unit of risk. The International Smaller is currently generating about -0.27 per unit of risk. If you would invest 2,209 in Baillie Gifford Emerging on August 28, 2024 and sell it today you would lose (153.00) from holding Baillie Gifford Emerging or give up 6.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Baillie Gifford Emerging vs. The International Smaller
Performance |
| Timeline |
| Baillie Gifford Emerging |
| The International Smaller |
Baillie Gifford and International Smaller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and International Smaller
The main advantage of trading using opposite Baillie Gifford and International Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, International Smaller 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 Smaller will offset losses from the drop in International Smaller's long position.| Baillie Gifford vs. Short Duration Inflation | Baillie Gifford vs. Loomis Sayles Inflation | Baillie Gifford vs. Schwab Treasury Inflation | Baillie Gifford vs. Deutsche Global Inflation |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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