Correlation Between CT Private and Scottish Mortgage

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

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

Diversification Opportunities for CT Private and Scottish Mortgage

0.51

Correlation Coefficient

CT Private  Scottish Mortgage

Very weak diversification

The 3 months correlation between CTPE and Scottish is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CT Private Equity and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and CT Private 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 CT Private Equity 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 CT Private i.e., CT Private and Scottish Mortgage go up and down completely randomly.

Pair Corralation between CT Private and Scottish Mortgage

Assuming the 90 days trading horizon CT Private is expected to generate 2.28 times less return on investment than Scottish Mortgage. In addition to that, CT Private is 1.1 times more volatile than Scottish Mortgage Investment. It trades about 0.09 of its total potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.22 per unit of volatility. If you would invest  81,859  in Scottish Mortgage Investment on September 13, 2024 and sell it today you would earn a total of  14,001  from holding Scottish Mortgage Investment or generate 17.1% return on investment over 90 days.

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

CT Private Equity  vs.  Scottish Mortgage Investment

CT Private Equity

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CT Private Equity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CT Private may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Scottish Mortgage

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Scottish Mortgage exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CT Private and Scottish Mortgage

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