Correlation Between Scottish Mortgage and National Retail

Can any of the company-specific risk be diversified away by investing in both Scottish Mortgage and National Retail 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 National Retail 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 National Retail Properties, you can compare the effects of market volatilities on Scottish Mortgage and National Retail 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 National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottish Mortgage and National Retail.

Diversification Opportunities for Scottish Mortgage and National Retail

-0.68

Correlation Coefficient

Scottish Mortgage  National Retail

Excellent diversification

The 3 months correlation between Scottish and National is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Scottish Mortgage i.e., Scottish Mortgage and National Retail go up and down completely randomly.

Pair Corralation between Scottish Mortgage and National Retail

Assuming the 90 days trading horizon Scottish Mortgage Investment is expected to generate 0.86 times more return on investment than National Retail. However, Scottish Mortgage Investment is 1.16 times less risky than National Retail. It trades about 0.0 of its potential returns per unit of risk. National Retail Properties is currently generating about -0.36 per unit of risk. If you would invest  1,177  in Scottish Mortgage Investment on October 11, 2024 and sell it today you would lose (2.00) from holding Scottish Mortgage Investment or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Scottish Mortgage Investment  vs.  National Retail Properties

Scottish Mortgage

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Scottish Mortgage reported solid returns over the last few months and may actually be approaching a breakup point.

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Scottish Mortgage and National Retail

The main advantage of trading using opposite Scottish Mortgage and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.

The idea behind Scottish Mortgage Investment and National Retail Properties 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.