Correlation Between Designer Brands and Scottish Mortgage

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

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

Diversification Opportunities for Designer Brands and Scottish Mortgage

-0.1

Correlation Coefficient

Designer Brands  Scottish Mortgage

Good diversification

The 3 months correlation between Designer and Scottish is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and Designer Brands 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 Designer Brands 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 Designer Brands i.e., Designer Brands and Scottish Mortgage go up and down completely randomly.

Pair Corralation between Designer Brands and Scottish Mortgage

Considering the 90-day investment horizon Designer Brands is expected to under-perform the Scottish Mortgage. In addition to that, Designer Brands is 2.29 times more volatile than Scottish Mortgage Investment. It trades about 0.0 of its total potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.05 per unit of volatility. If you would invest  847.00  in Scottish Mortgage Investment on October 10, 2024 and sell it today you would earn a total of  373.00  from holding Scottish Mortgage Investment or generate 44.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.19%
Values	Daily Returns

Designer Brands  vs.  Scottish Mortgage Investment

Designer Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Designer Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Designer Brands is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Scottish Mortgage

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scottish Mortgage may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Designer Brands and Scottish Mortgage

The main advantage of trading using opposite Designer Brands and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands 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 Designer Brands 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.