Correlation Between CT Private and Baillie Gifford

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

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

Diversification Opportunities for CT Private and Baillie Gifford

0.16

Correlation Coefficient

CT Private  Baillie Gifford

Average diversification

The 3 months correlation between CTPE and Baillie is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CT Private Equity and Baillie Gifford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Growth and CT Private 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 CT Private Equity 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 Growth has no effect on the direction of CT Private i.e., CT Private and Baillie Gifford go up and down completely randomly.

Pair Corralation between CT Private and Baillie Gifford

Assuming the 90 days trading horizon CT Private is expected to generate 2.17 times less return on investment than Baillie Gifford. In addition to that, CT Private is 1.17 times more volatile than Baillie Gifford Growth. It trades about 0.03 of its total potential returns per unit of risk. Baillie Gifford Growth is currently generating about 0.09 per unit of volatility. If you would invest  16,220  in Baillie Gifford Growth on September 4, 2024 and sell it today you would earn a total of  11,180  from holding Baillie Gifford Growth or generate 68.93% return on investment over 90 days.

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

CT Private Equity  vs.  Baillie Gifford Growth

CT Private Equity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CT Private Equity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CT Private is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Baillie Gifford Growth

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford Growth are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Baillie Gifford exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CT Private and Baillie Gifford

The main advantage of trading using opposite CT Private and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CT Private 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 CT Private Equity and Baillie Gifford Growth 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.