Correlation Between Long Term and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Long Term 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 Long Term 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 Long Term and Baillie Gifford Discovery, you can compare the effects of market volatilities on Long Term 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 Long Term with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Term and Baillie Gifford.
Diversification Opportunities for Long Term and Baillie Gifford
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Long and Baillie is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding The Long Term and Baillie Gifford Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Discovery and Long Term 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 Long Term 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 Discovery has no effect on the direction of Long Term i.e., Long Term and Baillie Gifford go up and down completely randomly.
Pair Corralation between Long Term and Baillie Gifford
Assuming the 90 days horizon Long Term is expected to generate 1.09 times less return on investment than Baillie Gifford. But when comparing it to its historical volatility, The Long Term is 1.53 times less risky than Baillie Gifford. It trades about 0.23 of its potential returns per unit of risk. Baillie Gifford Discovery is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 566.00 in Baillie Gifford Discovery on August 27, 2024 and sell it today you would earn a total of 35.00 from holding Baillie Gifford Discovery or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Long Term vs. Baillie Gifford Discovery
Performance |
| Timeline |
| Long Term |
| Baillie Gifford Discovery |
Long Term and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long Term and Baillie Gifford
The main advantage of trading using opposite Long Term and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Term 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.| Long Term vs. The Eafe Pure | Long Term vs. Baillie Gifford International | Long Term vs. Baillie Gifford International | Long Term vs. Baillie Gifford China |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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