Correlation Between Scottish Mortgage and ETC On
Can any of the company-specific risk be diversified away by investing in both Scottish Mortgage and ETC On 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 ETC On 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 ETC on CMCI, you can compare the effects of market volatilities on Scottish Mortgage and ETC On 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 ETC On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottish Mortgage and ETC On.
Diversification Opportunities for Scottish Mortgage and ETC On
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scottish and ETC is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment and ETC on CMCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC on CMCI 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 ETC On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC on CMCI has no effect on the direction of Scottish Mortgage i.e., Scottish Mortgage and ETC On go up and down completely randomly.
Pair Corralation between Scottish Mortgage and ETC On
Assuming the 90 days trading horizon Scottish Mortgage is expected to generate 40.89 times less return on investment than ETC On. But when comparing it to its historical volatility, Scottish Mortgage Investment is 30.83 times less risky than ETC On. It trades about 0.04 of its potential returns per unit of risk. ETC on CMCI is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,329 in ETC on CMCI on September 4, 2024 and sell it today you would lose (1,511) from holding ETC on CMCI or give up 34.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Scottish Mortgage Investment vs. ETC on CMCI
Performance |
| Timeline |
| Scottish Mortgage |
| ETC on CMCI |
Scottish Mortgage and ETC On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scottish Mortgage and ETC On
The main advantage of trading using opposite Scottish Mortgage and ETC On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage position performs unexpectedly, ETC On 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 ETC On will offset losses from the drop in ETC On's long position.The idea behind Scottish Mortgage Investment and ETC on CMCI 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.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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