Correlation Between M Large and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both M Large 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 M Large and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Large Cap and Baillie Gifford Discovery, you can compare the effects of market volatilities on M Large 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 M Large with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Large and Baillie Gifford.
Diversification Opportunities for M Large and Baillie Gifford
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTCGX and Baillie is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding M Large Cap 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 M Large 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 M Large 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 Discovery has no effect on the direction of M Large i.e., M Large and Baillie Gifford go up and down completely randomly.
Pair Corralation between M Large and Baillie Gifford
Assuming the 90 days horizon M Large Cap is expected to generate 0.57 times more return on investment than Baillie Gifford. However, M Large Cap is 1.75 times less risky than Baillie Gifford. It trades about 0.04 of its potential returns per unit of risk. Baillie Gifford Discovery is currently generating about -0.12 per unit of risk. If you would invest 3,732 in M Large Cap on September 14, 2024 and sell it today you would earn a total of 25.00 from holding M Large Cap or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
M Large Cap vs. Baillie Gifford Discovery
Performance |
| Timeline |
| M Large Cap |
| Baillie Gifford Discovery |
M Large and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Large and Baillie Gifford
The main advantage of trading using opposite M Large and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Large 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.| M Large vs. Alliancebernstein National Municipal | M Large vs. Transamerica Intermediate Muni | M Large vs. Franklin High Yield | M Large vs. The National Tax Free |
| Baillie Gifford vs. American Mutual Fund | Baillie Gifford vs. M Large Cap | Baillie Gifford vs. Qs Large Cap | Baillie Gifford vs. Dunham Large Cap |
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.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |