Correlation Between Baillie Gifford and American Mutual
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and American Mutual 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 American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford Discovery and American Mutual Fund, you can compare the effects of market volatilities on Baillie Gifford and American Mutual 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 American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and American Mutual.
Diversification Opportunities for Baillie Gifford and American Mutual
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baillie and American is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Discovery and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 Discovery are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and American Mutual go up and down completely randomly.
Pair Corralation between Baillie Gifford and American Mutual
Assuming the 90 days horizon Baillie Gifford Discovery is expected to under-perform the American Mutual. In addition to that, Baillie Gifford is 3.92 times more volatile than American Mutual Fund. It trades about -0.12 of its total potential returns per unit of risk. American Mutual Fund is currently generating about -0.09 per unit of volatility. If you would invest 5,942 in American Mutual Fund on September 14, 2024 and sell it today you would lose (50.00) from holding American Mutual Fund or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Discovery vs. American Mutual Fund
Performance |
| Timeline |
| Baillie Gifford Discovery |
| American Mutual |
Baillie Gifford and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and American Mutual
The main advantage of trading using opposite Baillie Gifford and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Baillie Gifford vs. American Mutual Fund | Baillie Gifford vs. M Large Cap | Baillie Gifford vs. Qs Large Cap | Baillie Gifford vs. Dunham Large Cap |
| American Mutual vs. Amcap Fund Class | American Mutual vs. American Balanced Fund | American Mutual vs. New Perspective Fund | American Mutual vs. New World Fund |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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