Correlation Between Apple and Scottish Mortgage
Can any of the company-specific risk be diversified away by investing in both Apple and Scottish Mortgage 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 Apple and Scottish Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Scottish Mortgage Investment, you can compare the effects of market volatilities on Apple and Scottish Mortgage 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 Apple with a short position of Scottish Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Scottish Mortgage.
Diversification Opportunities for Apple and Scottish Mortgage
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apple and Scottish is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and Apple 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 Apple Inc are associated (or correlated) with Scottish Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish Mortgage has no effect on the direction of Apple i.e., Apple and Scottish Mortgage go up and down completely randomly.
Pair Corralation between Apple and Scottish Mortgage
Assuming the 90 days trading horizon Apple is expected to generate 7.03 times less return on investment than Scottish Mortgage. But when comparing it to its historical volatility, Apple Inc is 1.2 times less risky than Scottish Mortgage. It trades about 0.02 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,177 in Scottish Mortgage Investment on October 11, 2024 and sell it today you would earn a total of 20.00 from holding Scottish Mortgage Investment or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Apple Inc vs. Scottish Mortgage Investment
Performance |
| Timeline |
| Apple Inc |
| Scottish Mortgage |
Apple and Scottish Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Scottish Mortgage
The main advantage of trading using opposite Apple and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Scottish Mortgage 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 Scottish Mortgage will offset losses from the drop in Scottish Mortgage's long position.| Apple vs. SINGAPORE AIRLINES | Apple vs. Direct Line Insurance | Apple vs. REVO INSURANCE SPA | Apple vs. Nok Airlines PCL |
| Scottish Mortgage vs. Cogent Communications Holdings | Scottish Mortgage vs. CRISPR Therapeutics AG | Scottish Mortgage vs. INTERCONT HOTELS | Scottish Mortgage vs. Rocket Internet SE |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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