Correlation Between Baillie Gifford and Leverage Shares

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

By analyzing existing cross correlation between Baillie Gifford Growth and Leverage Shares 3x, you can compare the effects of market volatilities on Baillie Gifford and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Leverage Shares.

Diversification Opportunities for Baillie Gifford and Leverage Shares

-0.89

Correlation Coefficient

Baillie Gifford  Leverage Shares

Pay attention - limited upside

The 3 months correlation between Baillie and Leverage is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Growth and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x 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 Growth are associated (or correlated) with Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Leverage Shares go up and down completely randomly.

Pair Corralation between Baillie Gifford and Leverage Shares

Assuming the 90 days trading horizon Baillie Gifford Growth is expected to generate 0.09 times more return on investment than Leverage Shares. However, Baillie Gifford Growth is 11.35 times less risky than Leverage Shares. It trades about 0.37 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about -0.19 per unit of risk. If you would invest  19,200  in Baillie Gifford Growth on September 3, 2024 and sell it today you would earn a total of  7,900  from holding Baillie Gifford Growth or generate 41.15% return on investment over 90 days.

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

Baillie Gifford Growth  vs.  Leverage Shares 3x

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.

Leverage Shares 3x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leverage Shares 3x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Baillie Gifford and Leverage Shares

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

The idea behind Baillie Gifford Growth and Leverage Shares 3x 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.