Correlation Between Transamerica Large and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Transamerica 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 Transamerica 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 Transamerica Large Cap and Baillie Gifford China, you can compare the effects of market volatilities on Transamerica 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 Transamerica Large with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica Large and Baillie Gifford.
Diversification Opportunities for Transamerica Large and Baillie Gifford
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Transamerica and Baillie is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Large Cap and Baillie Gifford China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford China and Transamerica 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 Transamerica 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 China has no effect on the direction of Transamerica Large i.e., Transamerica Large and Baillie Gifford go up and down completely randomly.
Pair Corralation between Transamerica Large and Baillie Gifford
Assuming the 90 days horizon Transamerica Large Cap is expected to generate 0.38 times more return on investment than Baillie Gifford. However, Transamerica Large Cap is 2.61 times less risky than Baillie Gifford. It trades about 0.17 of its potential returns per unit of risk. Baillie Gifford China is currently generating about 0.04 per unit of risk. If you would invest 1,206 in Transamerica Large Cap on September 4, 2024 and sell it today you would earn a total of 363.00 from holding Transamerica Large Cap or generate 30.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica Large Cap vs. Baillie Gifford China
Performance |
| Timeline |
| Transamerica Large Cap |
| Baillie Gifford China |
Transamerica Large and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica Large and Baillie Gifford
The main advantage of trading using opposite Transamerica Large and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica 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.| Transamerica Large vs. Fidelity Series Government | Transamerica Large vs. Blackrock Government Bond | Transamerica Large vs. John Hancock Government | Transamerica Large vs. Prudential Government Income |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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