Correlation Between Baillie Gifford and Fidelity Europe
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Fidelity Europe 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 Fidelity Europe 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 Fidelity Europe Fund, you can compare the effects of market volatilities on Baillie Gifford and Fidelity Europe 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 Fidelity Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Fidelity Europe.
Diversification Opportunities for Baillie Gifford and Fidelity Europe
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baillie and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Fidelity Europe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Europe 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 Fidelity Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Europe has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Fidelity Europe go up and down completely randomly.
Pair Corralation between Baillie Gifford and Fidelity Europe
Assuming the 90 days horizon Baillie Gifford Health is expected to generate 1.3 times more return on investment than Fidelity Europe. However, Baillie Gifford is 1.3 times more volatile than Fidelity Europe Fund. It trades about -0.01 of its potential returns per unit of risk. Fidelity Europe Fund is currently generating about -0.12 per unit of risk. If you would invest 589.00 in Baillie Gifford Health on September 2, 2024 and sell it today you would lose (6.00) from holding Baillie Gifford Health or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Health vs. Fidelity Europe Fund
Performance |
| Timeline |
| Baillie Gifford Health |
| Fidelity Europe |
Baillie Gifford and Fidelity Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Fidelity Europe
The main advantage of trading using opposite Baillie Gifford and Fidelity Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Fidelity Europe 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 Fidelity Europe will offset losses from the drop in Fidelity Europe'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 |
| Fidelity Europe vs. Fidelity Advisor Gold | Fidelity Europe vs. Gamco Global Gold | Fidelity Europe vs. Sprott Gold Equity | Fidelity Europe vs. International Investors Gold |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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