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 Health 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
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baillie and International is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health 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 Health 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 Health is expected to under-perform the International Smaller. In addition to that, Baillie Gifford is 1.84 times more volatile than The International Smaller. It trades about -0.22 of its total potential returns per unit of risk. The International Smaller is currently generating about -0.24 per unit of volatility. If you would invest 1,239 in The International Smaller on August 27, 2024 and sell it today you would lose (46.00) from holding The International Smaller or give up 3.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Health vs. The International Smaller
Performance |
| Timeline |
| Baillie Gifford Health |
| 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. The Eafe Pure | Baillie Gifford vs. The Long Term | Baillie Gifford vs. Baillie Gifford International | Baillie Gifford vs. Baillie Gifford International |
| International Smaller vs. Mutual Of America | International Smaller vs. Heartland Value Plus | International Smaller vs. Small Cap Value Series | International Smaller vs. Fidelity Small 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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