Correlation Between Europacific Growth and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Europacific Growth 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 Europacific Growth and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europacific Growth Fund and Baillie Gifford Health, you can compare the effects of market volatilities on Europacific Growth 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 Europacific Growth with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and Baillie Gifford.
Diversification Opportunities for Europacific Growth and Baillie Gifford
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europacific and Baillie is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund 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 Europacific Growth 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 Europacific Growth Fund 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 Europacific Growth i.e., Europacific Growth and Baillie Gifford go up and down completely randomly.
Pair Corralation between Europacific Growth and Baillie Gifford
Assuming the 90 days horizon Europacific Growth Fund is expected to generate 0.49 times more return on investment than Baillie Gifford. However, Europacific Growth Fund is 2.06 times less risky than Baillie Gifford. It trades about -0.15 of its potential returns per unit of risk. Baillie Gifford Health is currently generating about -0.11 per unit of risk. If you would invest 5,558 in Europacific Growth Fund on August 29, 2024 and sell it today you would lose (134.00) from holding Europacific Growth Fund or give up 2.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europacific Growth Fund vs. Baillie Gifford Health
Performance |
| Timeline |
| Europacific Growth |
| Baillie Gifford Health |
Europacific Growth and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europacific Growth and Baillie Gifford
The main advantage of trading using opposite Europacific Growth and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth 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.| Europacific Growth vs. Baillie Gifford Health | Europacific Growth vs. Alger Health Sciences | Europacific Growth vs. Delaware Healthcare Fund | Europacific Growth vs. Fidelity Advisor Health |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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