Correlation Between Titan Company and Baillie Gifford

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

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

Diversification Opportunities for Titan Company and Baillie Gifford

-0.29

Correlation Coefficient

Titan Company  Baillie Gifford

Very good diversification

The 3 months correlation between Titan and Baillie is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Baillie Gifford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Inte and Titan Company 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 Titan Company Limited 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 Inte has no effect on the direction of Titan Company i.e., Titan Company and Baillie Gifford go up and down completely randomly.

Pair Corralation between Titan Company and Baillie Gifford

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Baillie Gifford. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.09 times less risky than Baillie Gifford. The stock trades about -0.05 of its potential returns per unit of risk. The Baillie Gifford International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  758.00  in Baillie Gifford International on December 30, 2024 and sell it today you would earn a total of  31.00  from holding Baillie Gifford International or generate 4.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Titan Company Limited  vs.  Baillie Gifford International

Titan Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Titan Company is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Baillie Gifford Inte

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford International are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Baillie Gifford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Titan Company and Baillie Gifford

The main advantage of trading using opposite Titan Company and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Company 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 Titan Company Limited and Baillie Gifford International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.