Correlation Between Emerging Markets and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Baillie Gifford 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 Emerging Markets and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Emerging Markets and Baillie Gifford Emerging, you can compare the effects of market volatilities on Emerging Markets and Baillie Gifford 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 Emerging Markets with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Baillie Gifford.
Diversification Opportunities for Emerging Markets and Baillie Gifford
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Emerging and Baillie is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Baillie Gifford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Emerging and Emerging Markets 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 The Emerging Markets are associated (or correlated) with Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Emerging has no effect on the direction of Emerging Markets i.e., Emerging Markets and Baillie Gifford go up and down completely randomly.
Pair Corralation between Emerging Markets and Baillie Gifford
Assuming the 90 days horizon The Emerging Markets is expected to generate 1.02 times more return on investment than Baillie Gifford. However, Emerging Markets is 1.02 times more volatile than Baillie Gifford Emerging. It trades about 0.05 of its potential returns per unit of risk. Baillie Gifford Emerging is currently generating about 0.05 per unit of risk. If you would invest 1,754 in The Emerging Markets on October 20, 2024 and sell it today you would earn a total of 196.00 from holding The Emerging Markets or generate 11.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Emerging Markets vs. Baillie Gifford Emerging
Performance |
| Timeline |
| Emerging Markets |
| Baillie Gifford Emerging |
Emerging Markets and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Baillie Gifford
The main advantage of trading using opposite Emerging Markets and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Baillie Gifford 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 Baillie Gifford will offset losses from the drop in Baillie Gifford's long position.| Emerging Markets vs. T Rowe Price | Emerging Markets vs. Versatile Bond Portfolio | Emerging Markets vs. Morningstar Defensive Bond | Emerging Markets vs. Georgia Tax Free Bond |
| Baillie Gifford vs. The Eafe Pure | Baillie Gifford vs. The Long Term | Baillie Gifford vs. Baillie Gifford International | Baillie Gifford vs. Baillie Gifford International |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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