Correlation Between General Money and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both General Money 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 General Money and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Money Market and Baillie Gifford Discovery, you can compare the effects of market volatilities on General Money 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 General Money with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Money and Baillie Gifford.
Diversification Opportunities for General Money and Baillie Gifford
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between General and Baillie is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding General Money Market and Baillie Gifford Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Discovery and General Money 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 General Money Market 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 Discovery has no effect on the direction of General Money i.e., General Money and Baillie Gifford go up and down completely randomly.
Pair Corralation between General Money and Baillie Gifford
Assuming the 90 days horizon General Money is expected to generate 6.42 times less return on investment than Baillie Gifford. But when comparing it to its historical volatility, General Money Market is 12.02 times less risky than Baillie Gifford. It trades about 0.13 of its potential returns per unit of risk. Baillie Gifford Discovery is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 540.00 in Baillie Gifford Discovery on September 12, 2024 and sell it today you would earn a total of 32.00 from holding Baillie Gifford Discovery or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Money Market vs. Baillie Gifford Discovery
Performance |
| Timeline |
| General Money Market |
| Baillie Gifford Discovery |
General Money and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Money and Baillie Gifford
The main advantage of trading using opposite General Money and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Money 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.| General Money vs. Putnam Money Market | General Money vs. Cref Money Market | General Money vs. Ab Government Exchange | General Money vs. Money Market Obligations |
| Baillie Gifford vs. Chase Growth Fund | Baillie Gifford vs. Smallcap Growth Fund | Baillie Gifford vs. Qs Defensive Growth | Baillie Gifford vs. Rational Defensive Growth |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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