Correlation Between Enhanced and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Enhanced 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 Enhanced and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhanced Large Pany and Baillie Gifford Discovery, you can compare the effects of market volatilities on Enhanced 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 Enhanced with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced and Baillie Gifford.
Diversification Opportunities for Enhanced and Baillie Gifford
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Enhanced and Baillie is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany 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 Enhanced 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 Enhanced Large Pany 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 Enhanced i.e., Enhanced and Baillie Gifford go up and down completely randomly.
Pair Corralation between Enhanced and Baillie Gifford
Assuming the 90 days horizon Enhanced Large Pany is expected to generate 0.52 times more return on investment than Baillie Gifford. However, Enhanced Large Pany is 1.91 times less risky than Baillie Gifford. It trades about 0.15 of its potential returns per unit of risk. Baillie Gifford Discovery is currently generating about 0.08 per unit of risk. If you would invest 1,176 in Enhanced Large Pany on September 3, 2024 and sell it today you would earn a total of 392.00 from holding Enhanced Large Pany or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enhanced Large Pany vs. Baillie Gifford Discovery
Performance |
| Timeline |
| Enhanced Large Pany |
| Baillie Gifford Discovery |
Enhanced and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enhanced and Baillie Gifford
The main advantage of trading using opposite Enhanced and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced 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.| Enhanced vs. Us Micro Cap | Enhanced vs. Dfa Short Term Government | Enhanced vs. Emerging Markets Small | Enhanced vs. Dfa One Year Fixed |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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