Correlation Between Baillie Gifford and Aristotle Funds

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

Diversification Opportunities for Baillie Gifford and Aristotle Funds

-0.39

Correlation Coefficient

Baillie Gifford  Aristotle Funds

Very good diversification

The 3 months correlation between Baillie and Aristotle is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Health and Aristotle Funds Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle Funds Series 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 Aristotle Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristotle Funds Series has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Aristotle Funds go up and down completely randomly.

Pair Corralation between Baillie Gifford and Aristotle Funds

Assuming the 90 days horizon Baillie Gifford Health is expected to generate 1.14 times more return on investment than Aristotle Funds. However, Baillie Gifford is 1.14 times more volatile than Aristotle Funds Series. It trades about -0.04 of its potential returns per unit of risk. Aristotle Funds Series is currently generating about -0.06 per unit of risk. If you would invest  597.00  in Baillie Gifford Health on September 19, 2024 and sell it today you would lose (23.00) from holding Baillie Gifford Health or give up 3.85% of portfolio value over 90 days.

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

Baillie Gifford Health  vs.  Aristotle Funds Series

Baillie Gifford Health

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Aristotle Funds Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aristotle Funds Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Aristotle Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Baillie Gifford and Aristotle Funds

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

The idea behind Baillie Gifford Health and Aristotle Funds Series 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .