Correlation Between Mfs Prudent and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Mfs Prudent 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 Mfs Prudent and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Prudent Investor and Baillie Gifford Health, you can compare the effects of market volatilities on Mfs Prudent 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 Mfs Prudent with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Prudent and Baillie Gifford.
Diversification Opportunities for Mfs Prudent and Baillie Gifford
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mfs and Baillie is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Prudent Investor 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 Mfs Prudent 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 Mfs Prudent Investor 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 Mfs Prudent i.e., Mfs Prudent and Baillie Gifford go up and down completely randomly.
Pair Corralation between Mfs Prudent and Baillie Gifford
Assuming the 90 days horizon Mfs Prudent Investor is expected to generate 0.13 times more return on investment than Baillie Gifford. However, Mfs Prudent Investor is 7.68 times less risky than Baillie Gifford. It trades about 0.18 of its potential returns per unit of risk. Baillie Gifford Health is currently generating about -0.03 per unit of risk. If you would invest 1,200 in Mfs Prudent Investor on September 12, 2024 and sell it today you would earn a total of 15.00 from holding Mfs Prudent Investor or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Prudent Investor vs. Baillie Gifford Health
Performance |
| Timeline |
| Mfs Prudent Investor |
| Baillie Gifford Health |
Mfs Prudent and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Prudent and Baillie Gifford
The main advantage of trading using opposite Mfs Prudent and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Prudent 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.| Mfs Prudent vs. Rbc Global Equity | Mfs Prudent vs. Us Vector Equity | Mfs Prudent vs. Qs Global Equity | Mfs Prudent vs. Scharf Fund Retail |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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