Correlation Between Scottish Mortgage and State Street
Can any of the company-specific risk be diversified away by investing in both Scottish Mortgage and State Street 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 Scottish Mortgage and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scottish Mortgage Investment and State Street, you can compare the effects of market volatilities on Scottish Mortgage and State Street 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 Scottish Mortgage with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottish Mortgage and State Street.
Diversification Opportunities for Scottish Mortgage and State Street
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scottish and State is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment and State Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street and Scottish Mortgage 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 Scottish Mortgage Investment are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street has no effect on the direction of Scottish Mortgage i.e., Scottish Mortgage and State Street go up and down completely randomly.
Pair Corralation between Scottish Mortgage and State Street
Assuming the 90 days trading horizon Scottish Mortgage Investment is expected to generate 0.92 times more return on investment than State Street. However, Scottish Mortgage Investment is 1.09 times less risky than State Street. It trades about 0.06 of its potential returns per unit of risk. State Street is currently generating about 0.03 per unit of risk. If you would invest 841.00 in Scottish Mortgage Investment on November 8, 2024 and sell it today you would earn a total of 443.00 from holding Scottish Mortgage Investment or generate 52.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scottish Mortgage Investment vs. State Street
Performance |
| Timeline |
| Scottish Mortgage |
| State Street |
Scottish Mortgage and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scottish Mortgage and State Street
The main advantage of trading using opposite Scottish Mortgage and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Scottish Mortgage vs. The Hanover Insurance | Scottish Mortgage vs. PANIN INSURANCE | Scottish Mortgage vs. TT Electronics PLC | Scottish Mortgage vs. Samsung Electronics Co |
| State Street vs. EAT WELL INVESTMENT | State Street vs. China National Building | State Street vs. Rayonier Advanced Materials | State Street vs. PennantPark Investment |
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 the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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