Correlation Between Boeing and Scottish Mortgage

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

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

Diversification Opportunities for Boeing and Scottish Mortgage

0.69

Correlation Coefficient

Boeing  Scottish Mortgage

Poor diversification

The 3 months correlation between Boeing and Scottish is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and Boeing 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 The Boeing 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 Boeing i.e., Boeing and Scottish Mortgage go up and down completely randomly.

Pair Corralation between Boeing and Scottish Mortgage

Assuming the 90 days horizon Boeing is expected to generate 1.27 times less return on investment than Scottish Mortgage. In addition to that, Boeing is 1.76 times more volatile than Scottish Mortgage Investment. It trades about 0.12 of its total potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.28 per unit of volatility. If you would invest  1,024  in Scottish Mortgage Investment on October 23, 2024 and sell it today you would earn a total of  197.00  from holding Scottish Mortgage Investment or generate 19.24% return on investment over 90 days.

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

The Boeing  vs.  Scottish Mortgage Investment

Boeing

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Boeing reported solid returns over the last few months and may actually be approaching a breakup point.

Scottish Mortgage

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 21 (%) 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 Boeing and Scottish Mortgage

The main advantage of trading using opposite Boeing and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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 The Boeing 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.