Correlation Between Baillie Gifford and LEGAL GENERAL

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

Diversification Opportunities for Baillie Gifford and LEGAL GENERAL

-0.67

Correlation Coefficient

Baillie Gifford  LEGAL GENERAL

Excellent diversification

The 3 months correlation between Baillie and LEGAL is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Growth and LEGAL GENERAL UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGAL GENERAL UCITS 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 LEGAL GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGAL GENERAL UCITS has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and LEGAL GENERAL go up and down completely randomly.

Pair Corralation between Baillie Gifford and LEGAL GENERAL

Assuming the 90 days trading horizon Baillie Gifford Growth is expected to under-perform the LEGAL GENERAL. In addition to that, Baillie Gifford is 2.2 times more volatile than LEGAL GENERAL UCITS. It trades about -0.2 of its total potential returns per unit of risk. LEGAL GENERAL UCITS is currently generating about 0.15 per unit of volatility. If you would invest  92,115  in LEGAL GENERAL UCITS on December 22, 2024 and sell it today you would earn a total of  5,055  from holding LEGAL GENERAL UCITS or generate 5.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	83.87%
Values	Daily Returns

Baillie Gifford Growth  vs.  LEGAL GENERAL UCITS

Baillie Gifford Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baillie Gifford Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

LEGAL GENERAL UCITS

Risk-Adjusted Performance

Good

Over the last 90 days LEGAL GENERAL UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, LEGAL GENERAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Baillie Gifford and LEGAL GENERAL

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

The idea behind Baillie Gifford Growth and LEGAL GENERAL UCITS 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.