Correlation Between Third Avenue and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Third Avenue 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 Third Avenue and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Avenue Real and Baillie Gifford Health, you can compare the effects of market volatilities on Third Avenue 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 Third Avenue with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Baillie Gifford.
Diversification Opportunities for Third Avenue and Baillie Gifford
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Third and Baillie is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Real 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 Third Avenue 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 Third Avenue Real 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 Third Avenue i.e., Third Avenue and Baillie Gifford go up and down completely randomly.
Pair Corralation between Third Avenue and Baillie Gifford
Assuming the 90 days horizon Third Avenue Real is expected to generate 0.76 times more return on investment than Baillie Gifford. However, Third Avenue Real is 1.32 times less risky than Baillie Gifford. It trades about 0.08 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 1,973 in Third Avenue Real on September 12, 2024 and sell it today you would earn a total of 602.00 from holding Third Avenue Real or generate 30.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Third Avenue Real vs. Baillie Gifford Health
Performance |
| Timeline |
| Third Avenue Real |
| Baillie Gifford Health |
Third Avenue and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Avenue and Baillie Gifford
The main advantage of trading using opposite Third Avenue and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Avenue 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.| Third Avenue vs. Baillie Gifford Health | Third Avenue vs. Prudential Health Sciences | Third Avenue vs. Lord Abbett Health | Third Avenue vs. Deutsche Health And |
| Baillie Gifford vs. Lord Abbett Diversified | Baillie Gifford vs. Federated Hermes Conservative | Baillie Gifford vs. Western Asset Diversified | Baillie Gifford vs. Global Diversified Income |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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