Correlation Between Baillie Gifford and Eafe Choice
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Eafe Choice 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 Choice 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 Eafe Choice, you can compare the effects of market volatilities on Baillie Gifford and Eafe Choice 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 Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Eafe Choice.
Diversification Opportunities for Baillie Gifford and Eafe Choice
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baillie and Eafe is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Emerging and The Eafe Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Choice 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 Eafe Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Choice has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Eafe Choice go up and down completely randomly.
Pair Corralation between Baillie Gifford and Eafe Choice
Assuming the 90 days horizon Baillie Gifford Emerging is expected to under-perform the Eafe Choice. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baillie Gifford Emerging is 1.05 times less risky than Eafe Choice. The mutual fund trades about -0.15 of its potential returns per unit of risk. The The Eafe Choice is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,556 in The Eafe Choice on August 31, 2024 and sell it today you would lose (39.00) from holding The Eafe Choice or give up 2.51% 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 Eafe Choice
Performance |
| Timeline |
| Baillie Gifford Emerging |
| Eafe Choice |
Baillie Gifford and Eafe Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Eafe Choice
The main advantage of trading using opposite Baillie Gifford and Eafe Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Eafe Choice 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 Choice will offset losses from the drop in Eafe Choice's long position.| Baillie Gifford vs. Blrc Sgy Mnp | Baillie Gifford vs. Calamos Dynamic Convertible | Baillie Gifford vs. Bbh Intermediate Municipal | Baillie Gifford vs. Ultra Short Fixed Income |
| Eafe Choice vs. Fidelity Series 1000 | Eafe Choice vs. Tax Managed Large Cap | Eafe Choice vs. Aqr Large Cap | Eafe Choice vs. Qs 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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