Correlation Between International Smaller and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both International Smaller 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 International Smaller 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 International Smaller and Baillie Gifford Health, you can compare the effects of market volatilities on International Smaller 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 International Smaller with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Smaller and Baillie Gifford.
Diversification Opportunities for International Smaller and Baillie Gifford
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Baillie is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The International Smaller and Baillie Gifford Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Health and International Smaller 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 International Smaller 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 Health has no effect on the direction of International Smaller i.e., International Smaller and Baillie Gifford go up and down completely randomly.
Pair Corralation between International Smaller and Baillie Gifford
Assuming the 90 days horizon The International Smaller is expected to generate 0.72 times more return on investment than Baillie Gifford. However, The International Smaller is 1.39 times less risky than Baillie Gifford. It trades about 0.06 of its potential returns per unit of risk. Baillie Gifford Health is currently generating about 0.02 per unit of risk. If you would invest 1,240 in The International Smaller on September 14, 2024 and sell it today you would earn a total of 26.00 from holding The International Smaller or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The International Smaller vs. Baillie Gifford Health
Performance |
| Timeline |
| The International Smaller |
| Baillie Gifford Health |
International Smaller and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Smaller and Baillie Gifford
The main advantage of trading using opposite International Smaller and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Smaller 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.| International Smaller vs. The International Smaller | International Smaller vs. The International Equity | International Smaller vs. The Eafe Pure | International Smaller vs. The Long Term |
| Baillie Gifford vs. The International Smaller | Baillie Gifford vs. The International Smaller | Baillie Gifford vs. The International Equity | Baillie Gifford vs. The Eafe Pure |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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