Correlation Between Baillie Gifford and Americafirst Monthly

Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Americafirst Monthly 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 Americafirst Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baillie Gifford Global and Americafirst Monthly Risk On, you can compare the effects of market volatilities on Baillie Gifford and Americafirst Monthly 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 Americafirst Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Americafirst Monthly.

Diversification Opportunities for Baillie Gifford and Americafirst Monthly

0.05

Correlation Coefficient

Baillie Gifford  Americafirst Monthly

Significant diversification

The 3 months correlation between Baillie and Americafirst is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Global and Americafirst Monthly Risk On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Monthly 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 Global are associated (or correlated) with Americafirst Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Monthly has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Americafirst Monthly go up and down completely randomly.

Pair Corralation between Baillie Gifford and Americafirst Monthly

Assuming the 90 days horizon Baillie Gifford Global is expected to under-perform the Americafirst Monthly. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baillie Gifford Global is 1.05 times less risky than Americafirst Monthly. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Americafirst Monthly Risk On is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,355  in Americafirst Monthly Risk On on October 25, 2024 and sell it today you would earn a total of  152.00  from holding Americafirst Monthly Risk On or generate 11.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Baillie Gifford Global  vs.  Americafirst Monthly Risk On

Baillie Gifford Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baillie Gifford Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Baillie Gifford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Americafirst Monthly

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Americafirst Monthly Risk On are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Americafirst Monthly may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Baillie Gifford and Americafirst Monthly

The main advantage of trading using opposite Baillie Gifford and Americafirst Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Americafirst Monthly 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 Americafirst Monthly will offset losses from the drop in Americafirst Monthly's long position.

The idea behind Baillie Gifford Global and Americafirst Monthly Risk On 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.