Correlation Between Eafe Fund and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Eafe Fund 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 Eafe Fund and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Eafe Fund and Baillie Gifford Eafe, you can compare the effects of market volatilities on Eafe Fund 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 Eafe Fund with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eafe Fund and Baillie Gifford.
Diversification Opportunities for Eafe Fund and Baillie Gifford
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Eafe and Baillie is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding The Eafe Fund and Baillie Gifford Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Eafe and Eafe Fund 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 The Eafe Fund 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 Eafe has no effect on the direction of Eafe Fund i.e., Eafe Fund and Baillie Gifford go up and down completely randomly.
Pair Corralation between Eafe Fund and Baillie Gifford
Assuming the 90 days horizon The Eafe Fund is expected to generate 1.0 times more return on investment than Baillie Gifford. However, Eafe Fund is 1.0 times more volatile than Baillie Gifford Eafe. It trades about -0.06 of its potential returns per unit of risk. Baillie Gifford Eafe is currently generating about -0.06 per unit of risk. If you would invest 1,400 in The Eafe Fund on August 27, 2024 and sell it today you would lose (15.00) from holding The Eafe Fund or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Eafe Fund vs. Baillie Gifford Eafe
Performance |
| Timeline |
| Eafe Fund |
| Baillie Gifford Eafe |
Eafe Fund and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eafe Fund and Baillie Gifford
The main advantage of trading using opposite Eafe Fund and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eafe Fund 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.| Eafe Fund vs. The Long Term | Eafe Fund vs. Baillie Gifford China | Eafe Fund vs. Baillie Gifford China | Eafe Fund vs. The Global Alpha |
| Baillie Gifford vs. The Long Term | Baillie Gifford vs. Baillie Gifford China | Baillie Gifford vs. Baillie Gifford China | Baillie Gifford vs. The Global Alpha |
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 Positions Ratings module to 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.
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