Correlation Between Scottish Mortgage and LS 1x
Can any of the company-specific risk be diversified away by investing in both Scottish Mortgage and LS 1x 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 LS 1x 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 LS 1x Amazon, you can compare the effects of market volatilities on Scottish Mortgage and LS 1x 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 LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottish Mortgage and LS 1x.
Diversification Opportunities for Scottish Mortgage and LS 1x
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scottish and 1AMZ is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment and LS 1x Amazon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS 1x Amazon 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 LS 1x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS 1x Amazon has no effect on the direction of Scottish Mortgage i.e., Scottish Mortgage and LS 1x go up and down completely randomly.
Pair Corralation between Scottish Mortgage and LS 1x
Assuming the 90 days trading horizon Scottish Mortgage is expected to generate 1.14 times less return on investment than LS 1x. But when comparing it to its historical volatility, Scottish Mortgage Investment is 1.47 times less risky than LS 1x. It trades about 0.28 of its potential returns per unit of risk. LS 1x Amazon is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 581.00 in LS 1x Amazon on October 26, 2024 and sell it today you would earn a total of 137.00 from holding LS 1x Amazon or generate 23.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scottish Mortgage Investment vs. LS 1x Amazon
Performance |
| Timeline |
| Scottish Mortgage |
| LS 1x Amazon |
Scottish Mortgage and LS 1x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scottish Mortgage and LS 1x
The main advantage of trading using opposite Scottish Mortgage and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.| Scottish Mortgage vs. iShares MSCI Japan | Scottish Mortgage vs. Amundi EUR High | Scottish Mortgage vs. iShares JP Morgan | Scottish Mortgage vs. Xtrackers MSCI |
| LS 1x vs. iShares MSCI Japan | LS 1x vs. Amundi EUR High | LS 1x vs. iShares JP Morgan | LS 1x 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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