Correlation Between First Trust and Scottish Mortgage
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Scottish Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Nasdaq and Scottish Mortgage Investment, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Scottish Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Scottish Mortgage.
Diversification Opportunities for First Trust and Scottish Mortgage
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Scottish is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and First Trust 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 First Trust Nasdaq 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 First Trust i.e., First Trust and Scottish Mortgage go up and down completely randomly.
Pair Corralation between First Trust and Scottish Mortgage
Assuming the 90 days trading horizon First Trust is expected to generate 58.16 times less return on investment than Scottish Mortgage. In addition to that, First Trust is 1.47 times more volatile than Scottish Mortgage Investment. It trades about 0.0 of its total potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.07 per unit of volatility. If you would invest 73,517 in Scottish Mortgage Investment on September 2, 2024 and sell it today you would earn a total of 20,763 from holding Scottish Mortgage Investment or generate 28.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Nasdaq vs. Scottish Mortgage Investment
Performance |
| Timeline |
| First Trust Nasdaq |
| Scottish Mortgage |
First Trust and Scottish Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Scottish Mortgage
The main advantage of trading using opposite First Trust and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. Scottish Mortgage Investment | First Trust vs. VinaCapital Vietnam Opportunity | First Trust vs. Edinburgh Worldwide Investment | First Trust vs. Baillie Gifford Growth |
| Scottish Mortgage vs. iShares MSCI Japan | Scottish Mortgage vs. Amundi EUR High | Scottish Mortgage vs. iShares JP Morgan | Scottish Mortgage vs. Xtrackers MSCI |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |