Correlation Between Emerging Markets and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Emerging Markets 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 Emerging Markets 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 Emerging Markets and Baillie Gifford Emerging, you can compare the effects of market volatilities on Emerging Markets 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 Emerging Markets with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Baillie Gifford.
Diversification Opportunities for Emerging Markets and Baillie Gifford
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Emerging and Baillie is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Baillie Gifford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Emerging and Emerging Markets 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 Emerging Markets 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 Emerging has no effect on the direction of Emerging Markets i.e., Emerging Markets and Baillie Gifford go up and down completely randomly.
Pair Corralation between Emerging Markets and Baillie Gifford
Assuming the 90 days horizon The Emerging Markets is expected to under-perform the Baillie Gifford. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Emerging Markets is 1.01 times less risky than Baillie Gifford. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Baillie Gifford Emerging is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,983 in Baillie Gifford Emerging on October 19, 2024 and sell it today you would lose (23.00) from holding Baillie Gifford Emerging or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Emerging Markets vs. Baillie Gifford Emerging
Performance |
| Timeline |
| Emerging Markets |
| Baillie Gifford Emerging |
Emerging Markets and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Baillie Gifford
The main advantage of trading using opposite Emerging Markets and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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.| Emerging Markets vs. Morningstar Defensive Bond | Emerging Markets vs. Leader Short Term Bond | Emerging Markets vs. Doubleline Total Return | Emerging Markets vs. Metropolitan West Porate |
| Baillie Gifford vs. Morningstar Global Income | Baillie Gifford vs. Dreyfusstandish Global Fixed | Baillie Gifford vs. Mirova Global Green | Baillie Gifford vs. Tax Managed Large Cap |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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