Correlation Between ETC On and Scottish Mortgage

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

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

Diversification Opportunities for ETC On and Scottish Mortgage

0.77

Correlation Coefficient

ETC On  Scottish Mortgage

Poor diversification

The 3 months correlation between ETC and Scottish is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ETC on CMCI and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and ETC On 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 ETC on CMCI 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 ETC On i.e., ETC On and Scottish Mortgage go up and down completely randomly.

Pair Corralation between ETC On and Scottish Mortgage

Assuming the 90 days trading horizon ETC On is expected to generate 1.33 times less return on investment than Scottish Mortgage. But when comparing it to its historical volatility, ETC on CMCI is 2.26 times less risky than Scottish Mortgage. It trades about 0.05 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  93,940  in Scottish Mortgage Investment on December 30, 2024 and sell it today you would earn a total of  2,140  from holding Scottish Mortgage Investment or generate 2.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

ETC on CMCI  vs.  Scottish Mortgage Investment

ETC on CMCI

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ETC on CMCI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ETC On is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Scottish Mortgage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Scottish Mortgage is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ETC On and Scottish Mortgage

The main advantage of trading using opposite ETC On and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC On 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 ETC on CMCI 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.