Correlation Between Eafe Choice and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Eafe Choice 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 Eafe Choice and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Eafe Choice and Baillie Gifford China, you can compare the effects of market volatilities on Eafe Choice 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 Eafe Choice with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eafe Choice and Baillie Gifford.
Diversification Opportunities for Eafe Choice and Baillie Gifford
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eafe and Baillie is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding The Eafe Choice 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 Eafe Choice 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 The Eafe Choice 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 Eafe Choice i.e., Eafe Choice and Baillie Gifford go up and down completely randomly.
Pair Corralation between Eafe Choice and Baillie Gifford
Assuming the 90 days horizon The Eafe Choice is expected to under-perform the Baillie Gifford. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Eafe Choice is 2.39 times less risky than Baillie Gifford. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Baillie Gifford China is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 693.00 in Baillie Gifford China on September 13, 2024 and sell it today you would earn a total of 209.00 from holding Baillie Gifford China or generate 30.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 93.65% |
Values | Daily Returns |
The Eafe Choice vs. Baillie Gifford China
Performance |
Timeline |
Eafe Choice |
Baillie Gifford China |
Eafe Choice and Baillie Gifford Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eafe Choice and Baillie Gifford
The main advantage of trading using opposite Eafe Choice and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eafe Choice 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.Eafe Choice vs. Qs Large Cap | Eafe Choice vs. Fisher Large Cap | Eafe Choice vs. T Rowe Price | Eafe Choice vs. Morningstar Unconstrained Allocation |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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