Correlation Between Scottish Mortgage and IShares Global
Can any of the company-specific risk be diversified away by investing in both Scottish Mortgage and IShares Global 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 IShares Global 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 iShares Global Corp, you can compare the effects of market volatilities on Scottish Mortgage and IShares Global 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 IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottish Mortgage and IShares Global.
Diversification Opportunities for Scottish Mortgage and IShares Global
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scottish and IShares is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment and iShares Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Corp 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Corp has no effect on the direction of Scottish Mortgage i.e., Scottish Mortgage and IShares Global go up and down completely randomly.
Pair Corralation between Scottish Mortgage and IShares Global
Assuming the 90 days trading horizon Scottish Mortgage Investment is expected to generate 3.72 times more return on investment than IShares Global. However, Scottish Mortgage is 3.72 times more volatile than iShares Global Corp. It trades about 0.03 of its potential returns per unit of risk. iShares Global Corp is currently generating about 0.04 per unit of risk. If you would invest 78,315 in Scottish Mortgage Investment on August 27, 2024 and sell it today you would earn a total of 14,605 from holding Scottish Mortgage Investment or generate 18.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Scottish Mortgage Investment vs. iShares Global Corp
Performance |
| Timeline |
| Scottish Mortgage |
| iShares Global Corp |
Scottish Mortgage and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scottish Mortgage and IShares Global
The main advantage of trading using opposite Scottish Mortgage and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage position performs unexpectedly, IShares Global 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 IShares Global will offset losses from the drop in IShares Global's long position.The idea behind Scottish Mortgage Investment and iShares Global Corp 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.| IShares Global vs. iShares MSCI Japan | IShares Global vs. iShares JP Morgan | IShares Global vs. iShares MSCI Europe | IShares Global vs. iShares Nasdaq Biotechnology |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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