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 GLOBAL 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
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FIRST and Scottish is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding FIRST TRUST GLOBAL 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 GLOBAL 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 1.98 times less return on investment than Scottish Mortgage. But when comparing it to its historical volatility, FIRST TRUST GLOBAL is 1.37 times less risky than Scottish Mortgage. It trades about 0.03 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 72,546 in Scottish Mortgage Investment on September 25, 2024 and sell it today you would earn a total of 22,154 from holding Scottish Mortgage Investment or generate 30.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.51% |
| Values | Daily Returns |
FIRST TRUST GLOBAL vs. Scottish Mortgage Investment
Performance |
| Timeline |
| FIRST TRUST GLOBAL |
| 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. Baillie Gifford Growth | Scottish Mortgage vs. CT Private Equity | Scottish Mortgage vs. Aberdeen New India | Scottish Mortgage vs. Blackrock Energy and |
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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