Correlation Between British American and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both British American 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 British American and Baillie Gifford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Baillie Gifford European, you can compare the effects of market volatilities on British American 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 British American with a short position of Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Baillie Gifford.
Diversification Opportunities for British American and Baillie Gifford
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and Baillie is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco 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 British American 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 British American Tobacco 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 British American i.e., British American and Baillie Gifford go up and down completely randomly.
Pair Corralation between British American and Baillie Gifford
Assuming the 90 days trading horizon British American is expected to generate 2.16 times less return on investment than Baillie Gifford. In addition to that, British American is 1.25 times more volatile than Baillie Gifford European. It trades about 0.08 of its total potential returns per unit of risk. Baillie Gifford European is currently generating about 0.22 per unit of volatility. If you would invest 8,360 in Baillie Gifford European on September 20, 2024 and sell it today you would earn a total of 260.00 from holding Baillie Gifford European or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Baillie Gifford European
Performance |
| Timeline |
| British American Tobacco |
| Baillie Gifford European |
British American and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Baillie Gifford
The main advantage of trading using opposite British American and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American 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.| British American vs. Samsung Electronics Co | British American vs. Samsung Electronics Co | British American vs. Hyundai Motor | British American vs. Reliance Industries Ltd |
| Baillie Gifford vs. Cairo Communication SpA | Baillie Gifford vs. Empire Metals Limited | Baillie Gifford vs. European Metals Holdings | Baillie Gifford vs. Zoom Video Communications |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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