Correlation Between Fidelity Small and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Fidelity Small 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 Fidelity Small and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Small Cap and Baillie Gifford Eafe, you can compare the effects of market volatilities on Fidelity Small 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 Fidelity Small with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Baillie Gifford.
Diversification Opportunities for Fidelity Small and Baillie Gifford
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Baillie is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Baillie Gifford Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Eafe and Fidelity Small 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 Fidelity Small Cap 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 Eafe has no effect on the direction of Fidelity Small i.e., Fidelity Small and Baillie Gifford go up and down completely randomly.
Pair Corralation between Fidelity Small and Baillie Gifford
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.11 times more return on investment than Baillie Gifford. However, Fidelity Small is 1.11 times more volatile than Baillie Gifford Eafe. It trades about 0.12 of its potential returns per unit of risk. Baillie Gifford Eafe is currently generating about 0.05 per unit of risk. If you would invest 2,610 in Fidelity Small Cap on September 4, 2024 and sell it today you would earn a total of 1,076 from holding Fidelity Small Cap or generate 41.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Baillie Gifford Eafe
Performance |
| Timeline |
| Fidelity Small Cap |
| Baillie Gifford Eafe |
Fidelity Small and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Baillie Gifford
The main advantage of trading using opposite Fidelity Small and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small 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.| Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap |
| Baillie Gifford vs. The International Smaller | Baillie Gifford vs. The International Smaller | Baillie Gifford vs. The International Equity | Baillie Gifford vs. The Eafe Pure |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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