Correlation Between European Metals and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Baillie Gifford European, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Baillie Gifford.
Diversification Opportunities for European Metals and Baillie Gifford
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between European and Baillie is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Baillie Gifford European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford European and European Metals 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 European Metals Holdings 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 European has no effect on the direction of European Metals i.e., European Metals and Baillie Gifford go up and down completely randomly.
Pair Corralation between European Metals and Baillie Gifford
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Baillie Gifford. In addition to that, European Metals is 4.0 times more volatile than Baillie Gifford European. It trades about -0.23 of its total potential returns per unit of risk. Baillie Gifford European is currently generating about 0.22 per unit of volatility. If you would invest 8,360 in Baillie Gifford European on September 20, 2024 and sell it today you would earn a total of 260.00 from holding Baillie Gifford European or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Baillie Gifford European
Performance |
| Timeline |
| European Metals Holdings |
| Baillie Gifford European |
European Metals and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Baillie Gifford
The main advantage of trading using opposite European Metals and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. Waste Management | European Metals vs. Naturhouse Health SA | European Metals vs. Cardinal Health | European Metals vs. Planet Fitness Cl |
| Baillie Gifford vs. Cairo Communication SpA | Baillie Gifford vs. Empire Metals Limited | Baillie Gifford vs. European Metals Holdings | Baillie Gifford vs. Zoom Video Communications |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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