Correlation Between American Funds and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Baillie Gifford Global, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Baillie Gifford.
Diversification Opportunities for American Funds and Baillie Gifford
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Baillie is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Baillie Gifford Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Global and American Funds 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 American Funds New 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 Global has no effect on the direction of American Funds i.e., American Funds and Baillie Gifford go up and down completely randomly.
Pair Corralation between American Funds and Baillie Gifford
Assuming the 90 days horizon American Funds is expected to generate 1.37 times less return on investment than Baillie Gifford. But when comparing it to its historical volatility, American Funds New is 1.07 times less risky than Baillie Gifford. It trades about 0.11 of its potential returns per unit of risk. Baillie Gifford Global is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,869 in Baillie Gifford Global on September 2, 2024 and sell it today you would earn a total of 131.00 from holding Baillie Gifford Global or generate 7.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds New vs. Baillie Gifford Global
Performance |
| Timeline |
| American Funds New |
| Baillie Gifford Global |
American Funds and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Baillie Gifford
The main advantage of trading using opposite American Funds and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Ab Small Cap | American Funds vs. Kinetics Small Cap | American Funds vs. Small Midcap Dividend Income | American Funds vs. Touchstone Small Cap |
| Baillie Gifford vs. The Eafe Pure | Baillie Gifford vs. The Long Term | Baillie Gifford vs. Baillie Gifford International | Baillie Gifford vs. Baillie Gifford International |
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 Stocks Directory module to find actively traded stocks across global markets.
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