Correlation Between Baillie Gifford and Free Market
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Free Market 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 Free Market 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 Free Market International, you can compare the effects of market volatilities on Baillie Gifford and Free Market 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 Free Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Free Market.
Diversification Opportunities for Baillie Gifford and Free Market
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baillie and Free is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Free Market International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Free Market International 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 Free Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Free Market International has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Free Market go up and down completely randomly.
Pair Corralation between Baillie Gifford and Free Market
Assuming the 90 days horizon Baillie Gifford is expected to generate 1.16 times less return on investment than Free Market. In addition to that, Baillie Gifford is 1.62 times more volatile than Free Market International. It trades about 0.05 of its total potential returns per unit of risk. Free Market International is currently generating about 0.09 per unit of volatility. If you would invest 1,010 in Free Market International on September 4, 2024 and sell it today you would earn a total of 196.00 from holding Free Market International or generate 19.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Baillie Gifford Health vs. Free Market International
Performance |
| Timeline |
| Baillie Gifford Health |
| Free Market International |
Baillie Gifford and Free Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Free Market
The main advantage of trading using opposite Baillie Gifford and Free Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Free Market 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 Free Market will offset losses from the drop in Free Market's long position.| Baillie Gifford vs. T Rowe Price | Baillie Gifford vs. T Rowe Price | Baillie Gifford vs. Cs 607 Tax | Baillie Gifford vs. Franklin High Yield |
| Free Market vs. John Hancock Financial | Free Market vs. Mesirow Financial Small | Free Market vs. Financials Ultrasector Profund | Free Market vs. Blackrock Financial Institutions |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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