Correlation Between Baillie Gifford and Boeing

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

Diversification Opportunities for Baillie Gifford and Boeing

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Baillie and Boeing is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Baillie Gifford China and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 China are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Baillie Gifford i.e., Baillie Gifford and Boeing go up and down completely randomly.

Pair Corralation between Baillie Gifford and Boeing

Assuming the 90 days horizon Baillie Gifford is expected to generate 3.96 times less return on investment than Boeing. But when comparing it to its historical volatility, Baillie Gifford China is 1.25 times less risky than Boeing. It trades about 0.11 of its potential returns per unit of risk. The Boeing is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  15,675  in The Boeing on September 4, 2022 and sell it today you would earn a total of  2,612  from holding The Boeing or generate 16.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Baillie Gifford China  vs.  The Boeing

 Performance (%) 
       Timeline  
Baillie Gifford China 
Baillie Performance
0 of 100
Over the last 90 days Baillie Gifford China has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Baillie Gifford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baillie Price Channel

Boeing 
Boeing Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing Price Channel

Baillie Gifford and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baillie Gifford and Boeing

The main advantage of trading using opposite Baillie Gifford and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baillie Gifford position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.
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The idea behind Baillie Gifford China and The Boeing 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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Check out your portfolio center. 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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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