Correlation Between Virgin Wines and Baillie Gifford

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

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

Diversification Opportunities for Virgin Wines and Baillie Gifford

0.81

Correlation Coefficient

Virgin Wines  Baillie Gifford

Very poor diversification

The 3 months correlation between Virgin and Baillie is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK and Baillie Gifford European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford European and Virgin Wines 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 Virgin Wines UK 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 European has no effect on the direction of Virgin Wines i.e., Virgin Wines and Baillie Gifford go up and down completely randomly.

Pair Corralation between Virgin Wines and Baillie Gifford

Assuming the 90 days trading horizon Virgin Wines UK is expected to under-perform the Baillie Gifford. In addition to that, Virgin Wines is 1.22 times more volatile than Baillie Gifford European. It trades about -0.28 of its total potential returns per unit of risk. Baillie Gifford European is currently generating about -0.04 per unit of volatility. If you would invest  9,000  in Baillie Gifford European on September 14, 2024 and sell it today you would lose (240.00) from holding Baillie Gifford European or give up 2.67% of portfolio value over 90 days.

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

Virgin Wines UK  vs.  Baillie Gifford European

Virgin Wines UK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virgin Wines UK 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 Stock'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 firm private investors.

Baillie Gifford European

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baillie Gifford European has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Baillie Gifford is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Virgin Wines and Baillie Gifford

The main advantage of trading using opposite Virgin Wines and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines 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 Virgin Wines UK and Baillie Gifford European 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.