Correlation Between Roebuck Food and Baillie Gifford

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

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

Diversification Opportunities for Roebuck Food and Baillie Gifford

0.21

Correlation Coefficient

Roebuck Food  Baillie Gifford

Modest diversification

The 3 months correlation between Roebuck and Baillie is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Roebuck Food Group 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 Roebuck Food 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 Roebuck Food Group 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 Roebuck Food i.e., Roebuck Food and Baillie Gifford go up and down completely randomly.

Pair Corralation between Roebuck Food and Baillie Gifford

Assuming the 90 days trading horizon Roebuck Food Group is expected to under-perform the Baillie Gifford. But the stock apears to be less risky and, when comparing its historical volatility, Roebuck Food Group is 1.11 times less risky than Baillie Gifford. The stock trades about -0.03 of its potential returns per unit of risk. The Baillie Gifford European is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  8,749  in Baillie Gifford European on December 4, 2024 and sell it today you would earn a total of  1,141  from holding Baillie Gifford European or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Roebuck Food Group  vs.  Baillie Gifford European

Roebuck Food Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Roebuck Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Roebuck Food 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

Solid

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

Pair Trading with Roebuck Food and Baillie Gifford

The main advantage of trading using opposite Roebuck Food and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roebuck Food 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 Roebuck Food Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.