Correlation Between Vanguard Small-cap and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap 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 Vanguard Small-cap and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Growth and Baillie Gifford Eafe, you can compare the effects of market volatilities on Vanguard Small-cap 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 Vanguard Small-cap with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Baillie Gifford.
Diversification Opportunities for Vanguard Small-cap and Baillie Gifford
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VANGUARD and Baillie is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Baillie Gifford Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Eafe and Vanguard Small-cap 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 Vanguard Small Cap Growth 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 Eafe has no effect on the direction of Vanguard Small-cap i.e., Vanguard Small-cap and Baillie Gifford go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Baillie Gifford
Assuming the 90 days horizon Vanguard Small Cap Growth is expected to generate 1.16 times more return on investment than Baillie Gifford. However, Vanguard Small-cap is 1.16 times more volatile than Baillie Gifford Eafe. It trades about 0.14 of its potential returns per unit of risk. Baillie Gifford Eafe is currently generating about -0.01 per unit of risk. If you would invest 6,906 in Vanguard Small Cap Growth on September 2, 2024 and sell it today you would earn a total of 1,561 from holding Vanguard Small Cap Growth or generate 22.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Baillie Gifford Eafe
Performance |
| Timeline |
| Vanguard Small Cap |
| Baillie Gifford Eafe |
Vanguard Small-cap and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Baillie Gifford
The main advantage of trading using opposite Vanguard Small-cap and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap 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.| Vanguard Small-cap vs. Vanguard International Growth | Vanguard Small-cap vs. Vanguard Windsor Ii | Vanguard Small-cap vs. Vanguard Primecap Fund | Vanguard Small-cap vs. Vanguard Growth Fund |
| Baillie Gifford vs. Aqr Sustainable Long Short | Baillie Gifford vs. Aqr Long Short Equity | Baillie Gifford vs. Origin Emerging Markets | Baillie Gifford vs. Vanguard Developed Markets |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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