Correlation Between Tradeweb Markets and Scottish Mortgage

Can any of the company-specific risk be diversified away by investing in both Tradeweb Markets 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 Tradeweb Markets and Scottish Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tradeweb Markets and Scottish Mortgage Investment, you can compare the effects of market volatilities on Tradeweb Markets 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 Tradeweb Markets with a short position of Scottish Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradeweb Markets and Scottish Mortgage.

Diversification Opportunities for Tradeweb Markets and Scottish Mortgage

0.68

Correlation Coefficient

Tradeweb Markets  Scottish Mortgage

Poor diversification

The 3 months correlation between Tradeweb and Scottish is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and Tradeweb Markets 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 Tradeweb Markets 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 Tradeweb Markets i.e., Tradeweb Markets and Scottish Mortgage go up and down completely randomly.

Pair Corralation between Tradeweb Markets and Scottish Mortgage

Assuming the 90 days horizon Tradeweb Markets is expected to generate 1.91 times less return on investment than Scottish Mortgage. In addition to that, Tradeweb Markets is 1.3 times more volatile than Scottish Mortgage Investment. It trades about 0.08 of its total potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.2 per unit of volatility. If you would invest  1,012  in Scottish Mortgage Investment on October 6, 2024 and sell it today you would earn a total of  146.00  from holding Scottish Mortgage Investment or generate 14.43% return on investment over 90 days.

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

Tradeweb Markets  vs.  Scottish Mortgage Investment

Tradeweb Markets

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Tradeweb Markets may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Tradeweb Markets and Scottish Mortgage

The main advantage of trading using opposite Tradeweb Markets and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets 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.

The idea behind Tradeweb Markets and Scottish Mortgage Investment 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 Transaction History module to view history of all your transactions and understand their impact on performance.