Correlation Between Baillie Gifford and Warner Music

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

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

Diversification Opportunities for Baillie Gifford and Warner Music

0.0

Correlation Coefficient

Baillie Gifford  Warner Music

Pay attention - limited upside

The 3 months correlation between Baillie and Warner is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford European and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group 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 European are associated (or correlated) with Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Warner Music go up and down completely randomly.

Pair Corralation between Baillie Gifford and Warner Music

If you would invest  2,759  in Warner Music Group on February 3, 2024 and sell it today you would earn a total of  563.00  from holding Warner Music Group or generate 20.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Baillie Gifford European  vs.  Warner Music Group

Baillie Gifford European

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baillie Gifford European has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Baillie Gifford is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Warner Music Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warner Music Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Baillie Gifford and Warner Music

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

The idea behind Baillie Gifford European and Warner Music Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.