Correlation Between Intermediate Government and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Intermediate Government 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 Intermediate Government and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Government Bond and Baillie Gifford Health, you can compare the effects of market volatilities on Intermediate Government 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 Intermediate Government with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Government and Baillie Gifford.
Diversification Opportunities for Intermediate Government and Baillie Gifford
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Intermediate and Baillie is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Government Bond 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 Intermediate Government 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 Intermediate Government Bond 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 Intermediate Government i.e., Intermediate Government and Baillie Gifford go up and down completely randomly.
Pair Corralation between Intermediate Government and Baillie Gifford
Assuming the 90 days horizon Intermediate Government Bond is expected to generate 2.99 times more return on investment than Baillie Gifford. However, Intermediate Government is 2.99 times more volatile than Baillie Gifford Health. It trades about -0.04 of its potential returns per unit of risk. Baillie Gifford Health is currently generating about -0.22 per unit of risk. If you would invest 944.00 in Intermediate Government Bond on October 17, 2024 and sell it today you would lose (1.00) from holding Intermediate Government Bond or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Government Bond vs. Baillie Gifford Health
Performance |
| Timeline |
| Intermediate Government |
| Baillie Gifford Health |
Intermediate Government and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Government and Baillie Gifford
The main advantage of trading using opposite Intermediate Government and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Government 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.The idea behind Intermediate Government Bond and Baillie Gifford Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Baillie Gifford vs. Us Government Securities | Baillie Gifford vs. Schwab Government Money | Baillie Gifford vs. Intermediate Government Bond | Baillie Gifford vs. Nationwide Government Bond |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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