Correlation Between Baillie Gifford and JPM Research

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

Diversification Opportunities for Baillie Gifford and JPM Research

0.77

Correlation Coefficient

Baillie Gifford  JPM Research

Poor diversification

The 3 months correlation between Baillie and JPM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Growth and JPM Research Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Research Enhanced 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 JPM Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Research Enhanced has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and JPM Research go up and down completely randomly.

Pair Corralation between Baillie Gifford and JPM Research

Assuming the 90 days trading horizon Baillie Gifford Growth is expected to generate 2.83 times more return on investment than JPM Research. However, Baillie Gifford is 2.83 times more volatile than JPM Research Enhanced. It trades about 0.01 of its potential returns per unit of risk. JPM Research Enhanced is currently generating about -0.01 per unit of risk. If you would invest  28,200  in Baillie Gifford Growth on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Baillie Gifford Growth or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Baillie Gifford Growth  vs.  JPM Research Enhanced

Baillie Gifford Growth

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford Growth are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Baillie Gifford exhibited solid returns over the last few months and may actually be approaching a breakup point.

JPM Research Enhanced

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPM Research Enhanced are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JPM Research may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Baillie Gifford and JPM Research

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

The idea behind Baillie Gifford Growth and JPM Research Enhanced 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.