Correlation Between Baillie Gifford and HSBC MSCI

Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and HSBC MSCI 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 HSBC MSCI 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 HSBC MSCI USA, you can compare the effects of market volatilities on Baillie Gifford and HSBC MSCI 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 HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and HSBC MSCI.

Diversification Opportunities for Baillie Gifford and HSBC MSCI

0.64

Correlation Coefficient

Baillie Gifford  HSBC MSCI

Poor diversification

The 3 months correlation between Baillie and HSBC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Growth and HSBC MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI USA 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 HSBC MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC MSCI USA has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and HSBC MSCI go up and down completely randomly.

Pair Corralation between Baillie Gifford and HSBC MSCI

Assuming the 90 days trading horizon Baillie Gifford Growth is expected to generate 0.29 times more return on investment than HSBC MSCI. However, Baillie Gifford Growth is 3.48 times less risky than HSBC MSCI. It trades about 0.4 of its potential returns per unit of risk. HSBC MSCI USA is currently generating about 0.06 per unit of risk. If you would invest  19,220  in Baillie Gifford Growth on September 4, 2024 and sell it today you would earn a total of  8,880  from holding Baillie Gifford Growth or generate 46.2% return on investment over 90 days.

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

Baillie Gifford Growth  vs.  HSBC MSCI USA

Baillie Gifford Growth

Risk-Adjusted Performance

31 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford Growth are ranked lower than 31 (%) 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.

HSBC MSCI USA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC MSCI USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, HSBC MSCI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baillie Gifford and HSBC MSCI

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

The idea behind Baillie Gifford Growth and HSBC MSCI USA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.