Correlation Between Morgan Advanced and Baillie Gifford

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

Diversification Opportunities for Morgan Advanced and Baillie Gifford

MorganBaillieDiversified AwayMorganBaillieDiversified Away100%
0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Morgan and Baillie is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials 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 Morgan Advanced 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 Morgan Advanced Materials 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 Morgan Advanced i.e., Morgan Advanced and Baillie Gifford go up and down completely randomly.

Pair Corralation between Morgan Advanced and Baillie Gifford

Assuming the 90 days trading horizon Morgan Advanced Materials is expected to under-perform the Baillie Gifford. In addition to that, Morgan Advanced is 1.45 times more volatile than Baillie Gifford European. It trades about 0.0 of its total potential returns per unit of risk. Baillie Gifford European is currently generating about 0.02 per unit of volatility. If you would invest  9,377  in Baillie Gifford European on November 29, 2024 and sell it today you would earn a total of  593.00  from holding Baillie Gifford European or generate 6.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Morgan Advanced Materials  vs.  Baillie Gifford European

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.15MGAM BGEU
       Timeline  
Morgan Advanced Materials 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Morgan Advanced is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15JanFebFeb250255260265270275280
Baillie Gifford European 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford European are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Baillie Gifford unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15JanFebFeb859095100

Morgan Advanced and Baillie Gifford Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.55-1.91-1.27-0.630.00.621.241.862.48 0.10.20.30.4
JavaScript chart by amCharts 3.21.15MGAM BGEU
       Returns  

Pair Trading with Morgan Advanced and Baillie Gifford

The main advantage of trading using opposite Morgan Advanced and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Advanced 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 Morgan Advanced Materials 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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