Correlation Between Baillie Gifford and Consumer Staples

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

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

Diversification Opportunities for Baillie Gifford and Consumer Staples

0.34

Correlation Coefficient

Baillie Gifford  Consumer Staples

Weak diversification

The 3 months correlation between Baillie and Consumer is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Health are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Consumer Staples go up and down completely randomly.

Pair Corralation between Baillie Gifford and Consumer Staples

Assuming the 90 days horizon Baillie Gifford Health is expected to generate 0.23 times more return on investment than Consumer Staples. However, Baillie Gifford Health is 4.34 times less risky than Consumer Staples. It trades about -0.33 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about -0.43 per unit of risk. If you would invest  585.00  in Baillie Gifford Health on October 11, 2024 and sell it today you would lose (12.00) from holding Baillie Gifford Health or give up 2.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Baillie Gifford Health  vs.  Consumer Staples Portfolio

Baillie Gifford Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baillie Gifford Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Baillie Gifford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Consumer Staples Por

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consumer Staples Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Baillie Gifford and Consumer Staples

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

The idea behind Baillie Gifford Health and Consumer Staples Portfolio 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.