Correlation Between Templeton China and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Templeton China 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 Templeton China and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton China World and Baillie Gifford China, you can compare the effects of market volatilities on Templeton China 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 Templeton China with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton China and Baillie Gifford.
Diversification Opportunities for Templeton China and Baillie Gifford
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Templeton and Baillie is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Templeton China World and Baillie Gifford China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford China and Templeton China 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 Templeton China World 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 China has no effect on the direction of Templeton China i.e., Templeton China and Baillie Gifford go up and down completely randomly.
Pair Corralation between Templeton China and Baillie Gifford
Assuming the 90 days horizon Templeton China World is expected to generate 0.98 times more return on investment than Baillie Gifford. However, Templeton China World is 1.02 times less risky than Baillie Gifford. It trades about 0.07 of its potential returns per unit of risk. Baillie Gifford China is currently generating about 0.05 per unit of risk. If you would invest 671.00 in Templeton China World on October 20, 2024 and sell it today you would earn a total of 151.00 from holding Templeton China World or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.51% |
| Values | Daily Returns |
Templeton China World vs. Baillie Gifford China
Performance |
| Timeline |
| Templeton China World |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Baillie Gifford China |
Templeton China and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton China and Baillie Gifford
The main advantage of trading using opposite Templeton China and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton China 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.| Templeton China vs. Multi Manager High Yield | Templeton China vs. City National Rochdale | Templeton China vs. Federated High Yield | Templeton China vs. Virtus High Yield |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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