Correlation Between Baillie Gifford and IncomeShares Tesla

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

Diversification Opportunities for Baillie Gifford and IncomeShares Tesla

0.67

Correlation Coefficient

Baillie Gifford  IncomeShares Tesla

Poor diversification

The 3 months correlation between Baillie and IncomeShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford Growth and IncomeShares Tesla TSLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IncomeShares Tesla TSLA 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IncomeShares Tesla TSLA has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and IncomeShares Tesla go up and down completely randomly.

Pair Corralation between Baillie Gifford and IncomeShares Tesla

Assuming the 90 days trading horizon Baillie Gifford is expected to generate 3.83 times less return on investment than IncomeShares Tesla. But when comparing it to its historical volatility, Baillie Gifford Growth is 1.43 times less risky than IncomeShares Tesla. It trades about 0.09 of its potential returns per unit of risk. IncomeShares Tesla TSLA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  907.00  in IncomeShares Tesla TSLA on September 29, 2024 and sell it today you would earn a total of  92.00  from holding IncomeShares Tesla TSLA or generate 10.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Baillie Gifford Growth  vs.  IncomeShares Tesla TSLA

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 Tesla TSLA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IncomeShares Tesla TSLA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, IncomeShares Tesla may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Baillie Gifford and IncomeShares Tesla

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

The idea behind Baillie Gifford Growth and IncomeShares Tesla TSLA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.