Correlation Between Baillie Gifford and Baillie Gifford

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

By analyzing existing cross correlation between Baillie Gifford China and Baillie Gifford Eafe, you can compare the effects of market volatilities on Baillie Gifford 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 Baillie Gifford with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Baillie Gifford.

Diversification Opportunities for Baillie Gifford and Baillie Gifford

0.47

Correlation Coefficient

Baillie Gifford  Baillie Gifford

Very weak diversification

The 3 months correlation between Baillie and Baillie is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford China and Baillie Gifford Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Eafe 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 China 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 Eafe has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Baillie Gifford go up and down completely randomly.

Pair Corralation between Baillie Gifford and Baillie Gifford

Assuming the 90 days horizon Baillie Gifford China is expected to generate 1.02 times more return on investment than Baillie Gifford. However, Baillie Gifford is 1.02 times more volatile than Baillie Gifford Eafe. It trades about 0.28 of its potential returns per unit of risk. Baillie Gifford Eafe is currently generating about 0.04 per unit of risk. If you would invest  456.00  in Baillie Gifford China on February 4, 2024 and sell it today you would earn a total of  42.00  from holding Baillie Gifford China or generate 9.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Baillie Gifford China  vs.  Baillie Gifford Eafe

Baillie Gifford China

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford China are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Baillie Gifford showed solid returns over the last few months and may actually be approaching a breakup point.

Baillie Gifford Eafe

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford Eafe are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Baillie Gifford may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Baillie Gifford and Baillie Gifford

The main advantage of trading using opposite Baillie Gifford and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford 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.

The idea behind Baillie Gifford China and Baillie Gifford Eafe 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.