Correlation Between Baillie Gifford and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Fidelity International 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 Fidelity International 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 Fidelity International Discovery, you can compare the effects of market volatilities on Baillie Gifford and Fidelity International 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 Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Fidelity International.
Diversification Opportunities for Baillie Gifford and Fidelity International
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baillie and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Eafe and Fidelity International Discove in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International 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 Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Fidelity International go up and down completely randomly.
Pair Corralation between Baillie Gifford and Fidelity International
Assuming the 90 days horizon Baillie Gifford Eafe is expected to generate 1.64 times more return on investment than Fidelity International. However, Baillie Gifford is 1.64 times more volatile than Fidelity International Discovery. It trades about 0.03 of its potential returns per unit of risk. Fidelity International Discovery is currently generating about 0.03 per unit of risk. If you would invest 1,095 in Baillie Gifford Eafe on January 26, 2024 and sell it today you would earn a total of 171.00 from holding Baillie Gifford Eafe or generate 15.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baillie Gifford Eafe vs. Fidelity International Discove
Performance |
| Timeline |
| Baillie Gifford Eafe |
| Fidelity International |
Baillie Gifford and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baillie Gifford and Fidelity International
The main advantage of trading using opposite Baillie Gifford and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Fidelity International 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 Fidelity International will offset losses from the drop in Fidelity International's long position.| Baillie Gifford vs. Fidelity Small Cap | Baillie Gifford vs. Fidelity Advisor Mid | Baillie Gifford vs. Aquagold International | Baillie Gifford vs. Morningstar Unconstrained Allocation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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