Correlation Between Dow Jones and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Baillie Gifford Health, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Baillie Gifford.
Diversification Opportunities for Dow Jones and Baillie Gifford
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Baillie is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Baillie Gifford go up and down completely randomly.
Pair Corralation between Dow Jones and Baillie Gifford
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.65 times more return on investment than Baillie Gifford. However, Dow Jones Industrial is 1.54 times less risky than Baillie Gifford. It trades about 0.16 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 3,871,129 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 619,936 from holding Dow Jones Industrial or generate 16.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Baillie Gifford Health
Performance |
| Timeline |
Dow Jones and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Baillie Gifford Health
Pair trading matchups for Baillie Gifford
Pair Trading with Dow Jones and Baillie Gifford
The main advantage of trading using opposite Dow Jones and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| Baillie Gifford vs. Absolute Convertible Arbitrage | Baillie Gifford vs. Allianzgi Convertible Income | Baillie Gifford vs. Lord Abbett Convertible | Baillie Gifford vs. The Gamco Global |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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