Correlation Between Baillie Gifford and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Vanguard Small-cap 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 Vanguard Small-cap 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 Vanguard Small Cap Index, you can compare the effects of market volatilities on Baillie Gifford and Vanguard Small-cap 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 Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Vanguard Small-cap.
Diversification Opportunities for Baillie Gifford and Vanguard Small-cap
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baillie and Vanguard is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Baillie Gifford and Vanguard Small-cap
Assuming the 90 days horizon Baillie Gifford Health is expected to generate 1.22 times more return on investment than Vanguard Small-cap. However, Baillie Gifford is 1.22 times more volatile than Vanguard Small Cap Index. It trades about 0.11 of its potential returns per unit of risk. Vanguard Small Cap Index is currently generating about -0.08 per unit of risk. If you would invest 546.00 in Baillie Gifford Health on November 3, 2024 and sell it today you would earn a total of 27.00 from holding Baillie Gifford Health or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.12% |
| Values | Daily Returns |
Baillie Gifford Health vs. Vanguard Small Cap Index
Performance |
| Timeline |
| Baillie Gifford Health |
| Vanguard Small Cap |
Baillie Gifford and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Vanguard Small-cap
The main advantage of trading using opposite Baillie Gifford and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Vanguard Small-cap 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 Vanguard Small-cap will offset losses from the drop in Vanguard Small-cap's long position.| Baillie Gifford vs. Rbc Bluebay Global | Baillie Gifford vs. Aqr Risk Parity | Baillie Gifford vs. Needham Aggressive Growth | Baillie Gifford vs. Calamos High Income |
| Vanguard Small-cap vs. College Retirement Equities | Vanguard Small-cap vs. Retirement Living Through | Vanguard Small-cap vs. Putnam Retirement Advantage | Vanguard Small-cap vs. Columbia Moderate Growth |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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