Correlation Between Baillie Gifford and Wilmington Trust

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Can any of the company-specific risk be diversified away by investing in both Baillie Gifford and Wilmington Trust 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 Wilmington Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baillie Gifford Health and Wilmington Trust Retirement, you can compare the effects of market volatilities on Baillie Gifford and Wilmington Trust 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 Wilmington Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and Wilmington Trust.

Diversification Opportunities for Baillie Gifford and Wilmington Trust

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Baillie and Wilmington is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Wilmington Trust Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Trust Ret 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 Health are associated (or correlated) with Wilmington Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Trust Ret has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Wilmington Trust go up and down completely randomly.

Pair Corralation between Baillie Gifford and Wilmington Trust

Assuming the 90 days horizon Baillie Gifford Health is expected to under-perform the Wilmington Trust. In addition to that, Baillie Gifford is 1.26 times more volatile than Wilmington Trust Retirement. It trades about -0.03 of its total potential returns per unit of risk. Wilmington Trust Retirement is currently generating about 0.05 per unit of volatility. If you would invest  26,907  in Wilmington Trust Retirement on November 7, 2024 and sell it today you would earn a total of  6,528  from holding Wilmington Trust Retirement or generate 24.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Baillie Gifford Health  vs.  Wilmington Trust Retirement

 Performance 
       Timeline  
Baillie Gifford Health 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Baillie Gifford Health has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Baillie Gifford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Wilmington Trust Ret 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wilmington Trust Retirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Wilmington Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baillie Gifford and Wilmington Trust Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baillie Gifford and Wilmington Trust

The main advantage of trading using opposite Baillie Gifford and Wilmington Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Wilmington Trust 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 Wilmington Trust will offset losses from the drop in Wilmington Trust's long position.
The idea behind Baillie Gifford Health and Wilmington Trust Retirement 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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