Correlation Between IShares Edge and Scottish Mortgage

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

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

Diversification Opportunities for IShares Edge and Scottish Mortgage

0.0

Correlation Coefficient

IShares Edge  Scottish Mortgage

Pay attention - limited upside

The 3 months correlation between IShares and Scottish is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IShares Edge MSCI and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and IShares Edge 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 IShares Edge MSCI 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 IShares Edge i.e., IShares Edge and Scottish Mortgage go up and down completely randomly.

Pair Corralation between IShares Edge and Scottish Mortgage

If you would invest  94,700  in Scottish Mortgage Investment on December 21, 2024 and sell it today you would earn a total of  1,860  from holding Scottish Mortgage Investment or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

IShares Edge MSCI  vs.  Scottish Mortgage Investment

IShares Edge MSCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days IShares Edge MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares Edge is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 IShares Edge and Scottish Mortgage

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