Correlation Between Baillie Gifford and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Equity Growth 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 Equity Growth 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 Equity Growth Strategy, you can compare the effects of market volatilities on Baillie Gifford and Equity Growth 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 Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Equity Growth.
Diversification Opportunities for Baillie Gifford and Equity Growth
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baillie and Equity is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Equity Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth Strategy 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 Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth Strategy has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Equity Growth go up and down completely randomly.
Pair Corralation between Baillie Gifford and Equity Growth
Assuming the 90 days horizon Baillie Gifford Health is expected to under-perform the Equity Growth. In addition to that, Baillie Gifford is 2.72 times more volatile than Equity Growth Strategy. It trades about -0.01 of its total potential returns per unit of risk. Equity Growth Strategy is currently generating about 0.34 per unit of volatility. If you would invest 1,307 in Equity Growth Strategy on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Equity Growth Strategy or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Health vs. Equity Growth Strategy
Performance |
| Timeline |
| Baillie Gifford Health |
| Equity Growth Strategy |
Baillie Gifford and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Equity Growth
The main advantage of trading using opposite Baillie Gifford and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth'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 |
| Equity Growth vs. International Developed Markets | Equity Growth vs. Global Real Estate | Equity Growth vs. Global Real Estate | Equity Growth vs. Global Real Estate |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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