Correlation Between Baillie Gifford and Blackrock Energy

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

Diversification Opportunities for Baillie Gifford and Blackrock Energy

0.73

Correlation Coefficient

Baillie Gifford  Blackrock Energy

Poor diversification

The 3 months correlation between Baillie and Blackrock is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Growth and Blackrock Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Energy 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 Blackrock Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Energy has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Blackrock Energy go up and down completely randomly.

Pair Corralation between Baillie Gifford and Blackrock Energy

Assuming the 90 days trading horizon Baillie Gifford Growth is expected to generate 1.19 times more return on investment than Blackrock Energy. However, Baillie Gifford is 1.19 times more volatile than Blackrock Energy and. It trades about 0.38 of its potential returns per unit of risk. Blackrock Energy and is currently generating about 0.14 per unit of risk. If you would invest  19,220  in Baillie Gifford Growth on September 4, 2024 and sell it today you would earn a total of  8,180  from holding Baillie Gifford Growth or generate 42.56% 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.  Blackrock Energy and

Baillie Gifford Growth

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford Growth are ranked lower than 29 (%) 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.

Blackrock Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Energy and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Blackrock Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Baillie Gifford and Blackrock Energy

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

The idea behind Baillie Gifford Growth and Blackrock Energy and 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.