Correlation Between AJ Bell and Baillie Gifford

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

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

Diversification Opportunities for AJ Bell and Baillie Gifford

-0.32

Correlation Coefficient

AJ Bell  Baillie Gifford

Very good diversification

The 3 months correlation between AJB and Baillie is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AJ Bell plc and Baillie Gifford European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford European and AJ Bell 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 AJ Bell plc 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 European has no effect on the direction of AJ Bell i.e., AJ Bell and Baillie Gifford go up and down completely randomly.

Pair Corralation between AJ Bell and Baillie Gifford

Assuming the 90 days trading horizon AJ Bell plc is expected to under-perform the Baillie Gifford. In addition to that, AJ Bell is 1.43 times more volatile than Baillie Gifford European. It trades about -0.05 of its total potential returns per unit of risk. Baillie Gifford European is currently generating about 0.14 per unit of volatility. If you would invest  8,499  in Baillie Gifford European on December 30, 2024 and sell it today you would earn a total of  911.00  from holding Baillie Gifford European or generate 10.72% return on investment over 90 days.

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

AJ Bell plc  vs.  Baillie Gifford European

AJ Bell plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days AJ Bell plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, AJ Bell is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Baillie Gifford European

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford European are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Baillie Gifford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AJ Bell and Baillie Gifford

The main advantage of trading using opposite AJ Bell and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ Bell 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 AJ Bell plc and Baillie Gifford European 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..