Correlation Between Baillie Gifford and Transamerica Large

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

By analyzing existing cross correlation between Baillie Gifford Health and Transamerica Large Growth, you can compare the effects of market volatilities on Baillie Gifford and Transamerica Large 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 Transamerica Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Transamerica Large.

Diversification Opportunities for Baillie Gifford and Transamerica Large

-0.66

Correlation Coefficient

Baillie Gifford  Transamerica Large

Excellent diversification

The 3 months correlation between Baillie and Transamerica is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Transamerica Large Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Growth 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 Health are associated (or correlated) with Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Growth has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Transamerica Large go up and down completely randomly.

Pair Corralation between Baillie Gifford and Transamerica Large

Assuming the 90 days horizon Baillie Gifford Health is expected to under-perform the Transamerica Large. In addition to that, Baillie Gifford is 1.34 times more volatile than Transamerica Large Growth. It trades about -0.05 of its total potential returns per unit of risk. Transamerica Large Growth is currently generating about 0.32 per unit of volatility. If you would invest  1,323  in Transamerica Large Growth on September 16, 2024 and sell it today you would earn a total of  359.00  from holding Transamerica Large Growth or generate 27.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Baillie Gifford Health  vs.  Transamerica Large Growth

Baillie Gifford Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Transamerica Large Growth

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Large Growth are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Transamerica Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baillie Gifford and Transamerica Large

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

The idea behind Baillie Gifford Health and Transamerica Large Growth 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.