Correlation Between Baillie Gifford and IncomeShares Apple

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

By analyzing existing cross correlation between Baillie Gifford Growth and IncomeShares Apple Options, you can compare the effects of market volatilities on Baillie Gifford and IncomeShares Apple 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 IncomeShares Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baillie Gifford and IncomeShares Apple.

Diversification Opportunities for Baillie Gifford and IncomeShares Apple

0.72

Correlation Coefficient

Baillie Gifford  IncomeShares Apple

Poor diversification

The 3 months correlation between Baillie and IncomeShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Growth and IncomeShares Apple Options in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IncomeShares Apple 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 Growth are associated (or correlated) with IncomeShares Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IncomeShares Apple has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and IncomeShares Apple go up and down completely randomly.

Pair Corralation between Baillie Gifford and IncomeShares Apple

Assuming the 90 days trading horizon Baillie Gifford Growth is expected to generate 1.86 times more return on investment than IncomeShares Apple. However, Baillie Gifford is 1.86 times more volatile than IncomeShares Apple Options. It trades about 0.32 of its potential returns per unit of risk. IncomeShares Apple Options is currently generating about 0.19 per unit of risk. If you would invest  20,150  in Baillie Gifford Growth on September 30, 2024 and sell it today you would earn a total of  7,750  from holding Baillie Gifford Growth or generate 38.46% return on investment over 90 days.

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

Baillie Gifford Growth  vs.  IncomeShares Apple Options

Baillie Gifford Growth

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford Growth are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Baillie Gifford exhibited solid returns over the last few months and may actually be approaching a breakup point.

IncomeShares Apple

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IncomeShares Apple Options are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, IncomeShares Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Baillie Gifford and IncomeShares Apple

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

The idea behind Baillie Gifford Growth and IncomeShares Apple Options 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.