Correlation Between Baillie Gifford and INVESCO MARKETS
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and INVESCO MARKETS 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 Baillie Gifford and INVESCO MARKETS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford Growth and INVESCO MARKETS II, you can compare the effects of market volatilities on Baillie Gifford and INVESCO MARKETS 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 Baillie Gifford with a short position of INVESCO MARKETS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and INVESCO MARKETS.
Diversification Opportunities for Baillie Gifford and INVESCO MARKETS
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baillie and INVESCO is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Growth and INVESCO MARKETS II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVESCO MARKETS II and Baillie Gifford 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 Baillie Gifford Growth are associated (or correlated) with INVESCO MARKETS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVESCO MARKETS II has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and INVESCO MARKETS go up and down completely randomly.
Pair Corralation between Baillie Gifford and INVESCO MARKETS
Assuming the 90 days trading horizon Baillie Gifford Growth is expected to generate 4.03 times more return on investment than INVESCO MARKETS. However, Baillie Gifford is 4.03 times more volatile than INVESCO MARKETS II. It trades about 0.33 of its potential returns per unit of risk. INVESCO MARKETS II is currently generating about 0.11 per unit of risk. If you would invest 24,200 in Baillie Gifford Growth on September 12, 2024 and sell it today you would earn a total of 3,800 from holding Baillie Gifford Growth or generate 15.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Growth vs. INVESCO MARKETS II
Performance |
| Timeline |
| Baillie Gifford Growth |
| INVESCO MARKETS II |
Baillie Gifford and INVESCO MARKETS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and INVESCO MARKETS
The main advantage of trading using opposite Baillie Gifford and INVESCO MARKETS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, INVESCO MARKETS 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 INVESCO MARKETS will offset losses from the drop in INVESCO MARKETS's long position.| Baillie Gifford vs. iShares MSCI Japan | Baillie Gifford vs. Amundi EUR High | Baillie Gifford vs. iShares JP Morgan | Baillie Gifford vs. Xtrackers MSCI |
| INVESCO MARKETS vs. INVESCO MARKETS II | INVESCO MARKETS vs. INVESCO MARKETS II | INVESCO MARKETS vs. INVESCO MARKETS II | INVESCO MARKETS vs. INVESCO MARKETS II |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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