Correlation Between Baillie Gifford and Short Duration
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Short Duration 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 Short Duration 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 Short Duration Plus, you can compare the effects of market volatilities on Baillie Gifford and Short Duration 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 Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Short Duration.
Diversification Opportunities for Baillie Gifford and Short Duration
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baillie and Short is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Short Duration Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration Plus 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Plus has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Short Duration go up and down completely randomly.
Pair Corralation between Baillie Gifford and Short Duration
Assuming the 90 days horizon Baillie Gifford Health is expected to under-perform the Short Duration. In addition to that, Baillie Gifford is 5.84 times more volatile than Short Duration Plus. It trades about -0.03 of its total potential returns per unit of risk. Short Duration Plus is currently generating about 0.02 per unit of volatility. If you would invest 1,082 in Short Duration Plus on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Short Duration Plus or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 25.05% |
| Values | Daily Returns |
Baillie Gifford Health vs. Short Duration Plus
Performance |
| Timeline |
| Baillie Gifford Health |
| Short Duration Plus |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Baillie Gifford and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Short Duration
The main advantage of trading using opposite Baillie Gifford and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration'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 |
| Short Duration vs. Financials Ultrasector Profund | Short Duration vs. Angel Oak Financial | Short Duration vs. Davis Financial Fund | Short Duration vs. Davis Financial Fund |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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