Correlation Between Baillie Gifford and Eafe Fund
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Eafe Fund 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 Eafe Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford Eafe and The Eafe Fund, you can compare the effects of market volatilities on Baillie Gifford and Eafe Fund 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 Eafe Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Eafe Fund.
Diversification Opportunities for Baillie Gifford and Eafe Fund
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baillie and Eafe is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Eafe and The Eafe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Fund 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 Eafe are associated (or correlated) with Eafe Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Fund has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Eafe Fund go up and down completely randomly.
Pair Corralation between Baillie Gifford and Eafe Fund
Assuming the 90 days horizon Baillie Gifford Eafe is expected to under-perform the Eafe Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Baillie Gifford Eafe is 1.1 times less risky than Eafe Fund. The mutual fund trades about -0.23 of its potential returns per unit of risk. The The Eafe Fund is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 1,281 in The Eafe Fund on January 19, 2024 and sell it today you would lose (54.00) from holding The Eafe Fund or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Eafe vs. The Eafe Fund
Performance |
| Timeline |
| Baillie Gifford Eafe |
| Eafe Fund |
Baillie Gifford and Eafe Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Eafe Fund
The main advantage of trading using opposite Baillie Gifford and Eafe Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Eafe Fund 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 Eafe Fund will offset losses from the drop in Eafe Fund's long position.| Baillie Gifford vs. Europacific Growth Fund | Baillie Gifford vs. Europacific Growth Fund | Baillie Gifford vs. Europacific Growth Fund |
| Eafe Fund vs. Europacific Growth Fund | Eafe Fund vs. Europacific Growth Fund | Eafe Fund vs. Europacific Growth Fund |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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