Correlation Between Baillie Gifford and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Emerging Markets 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 Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford International and The Emerging Markets, you can compare the effects of market volatilities on Baillie Gifford and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Emerging Markets.
Diversification Opportunities for Baillie Gifford and Emerging Markets
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baillie and Emerging is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford International and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 International are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Emerging Markets go up and down completely randomly.
Pair Corralation between Baillie Gifford and Emerging Markets
Assuming the 90 days horizon Baillie Gifford International is expected to generate 0.93 times more return on investment than Emerging Markets. However, Baillie Gifford International is 1.08 times less risky than Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. The Emerging Markets is currently generating about -0.18 per unit of risk. If you would invest 792.00 in Baillie Gifford International on September 2, 2024 and sell it today you would earn a total of 10.00 from holding Baillie Gifford International or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford International vs. The Emerging Markets
Performance |
| Timeline |
| Baillie Gifford Inte |
| Emerging Markets |
Baillie Gifford and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Emerging Markets
The main advantage of trading using opposite Baillie Gifford and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Baillie Gifford vs. The Eafe Pure | Baillie Gifford vs. The Long Term | Baillie Gifford vs. Baillie Gifford China | Baillie Gifford vs. Baillie Gifford China |
| Emerging Markets vs. The Eafe Pure | Emerging Markets vs. The Long Term | Emerging Markets vs. Baillie Gifford International | Emerging Markets 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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