Correlation Between Visa and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Baillie Gifford European, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Baillie Gifford.
Diversification Opportunities for Visa and Baillie Gifford
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Visa and Baillie is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Baillie Gifford European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford European and Visa 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 Visa Class A 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 European has no effect on the direction of Visa i.e., Visa and Baillie Gifford go up and down completely randomly.
Pair Corralation between Visa and Baillie Gifford
Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Baillie Gifford. In addition to that, Visa is 1.39 times more volatile than Baillie Gifford European. It trades about -0.03 of its total potential returns per unit of risk. Baillie Gifford European is currently generating about 0.12 per unit of volatility. If you would invest 8,460 in Baillie Gifford European on September 19, 2024 and sell it today you would earn a total of 160.00 from holding Baillie Gifford European or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Visa Class A vs. Baillie Gifford European
Performance |
| Timeline |
| Visa Class A |
| Baillie Gifford European |
Visa and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Baillie Gifford
The main advantage of trading using opposite Visa and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.The idea behind Visa Class A and Baillie Gifford European pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Baillie Gifford vs. British American Tobacco | Baillie Gifford vs. Gaztransport et Technigaz | Baillie Gifford vs. Pets at Home | Baillie Gifford vs. Fulcrum Metals PLC |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |