Correlation Between Baillie Gifford and IShares Physical

Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and IShares Physical 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 IShares Physical 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 iShares Physical Silver, you can compare the effects of market volatilities on Baillie Gifford and IShares Physical 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 IShares Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and IShares Physical.

Diversification Opportunities for Baillie Gifford and IShares Physical

0.78

Correlation Coefficient

Baillie Gifford  IShares Physical

Poor diversification

The 3 months correlation between Baillie and IShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford European and iShares Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Physical Silver 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 IShares Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Physical Silver has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and IShares Physical go up and down completely randomly.

Pair Corralation between Baillie Gifford and IShares Physical

Assuming the 90 days trading horizon Baillie Gifford is expected to generate 1.66 times less return on investment than IShares Physical. But when comparing it to its historical volatility, Baillie Gifford European is 1.13 times less risky than IShares Physical. It trades about 0.14 of its potential returns per unit of risk. iShares Physical Silver is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,752  in iShares Physical Silver on December 29, 2024 and sell it today you would earn a total of  503.00  from holding iShares Physical Silver or generate 18.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Baillie Gifford European  vs.  iShares Physical Silver

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 uncertain basic indicators, Baillie Gifford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

iShares Physical Silver

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Physical Silver are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Physical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baillie Gifford and IShares Physical

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

The idea behind Baillie Gifford European and iShares Physical Silver 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.