Correlation Between Baillie Gifford and Eafe Pure
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Eafe Pure 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 Eafe Pure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford Eafe and The Eafe Pure, you can compare the effects of market volatilities on Baillie Gifford and Eafe Pure 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 Eafe Pure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Eafe Pure.
Diversification Opportunities for Baillie Gifford and Eafe Pure
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baillie and Eafe is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Eafe and The Eafe Pure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Pure 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 Eafe are associated (or correlated) with Eafe Pure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Pure has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Eafe Pure go up and down completely randomly.
Pair Corralation between Baillie Gifford and Eafe Pure
Assuming the 90 days horizon Baillie Gifford Eafe is expected to generate 0.99 times more return on investment than Eafe Pure. However, Baillie Gifford Eafe is 1.01 times less risky than Eafe Pure. It trades about 0.1 of its potential returns per unit of risk. The Eafe Pure is currently generating about 0.06 per unit of risk. If you would invest 1,396 in Baillie Gifford Eafe on September 12, 2024 and sell it today you would earn a total of 36.00 from holding Baillie Gifford Eafe or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Eafe vs. The Eafe Pure
Performance |
| Timeline |
| Baillie Gifford Eafe |
| Eafe Pure |
Baillie Gifford and Eafe Pure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Eafe Pure
The main advantage of trading using opposite Baillie Gifford and Eafe Pure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Eafe Pure 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 Eafe Pure will offset losses from the drop in Eafe Pure's long position.| Baillie Gifford vs. Europacific Growth Fund | Baillie Gifford vs. SCOR PK | Baillie Gifford vs. Morningstar Unconstrained Allocation | Baillie Gifford vs. Thrivent High Yield |
| Eafe Pure vs. Europacific Growth Fund | Eafe Pure vs. SCOR PK | Eafe Pure vs. Morningstar Unconstrained Allocation | Eafe Pure vs. Thrivent High Yield |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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