Correlation Between JPMORGAN ETFS and Scottish Mortgage

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

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

Diversification Opportunities for JPMORGAN ETFS and Scottish Mortgage

0.51

Correlation Coefficient

JPMORGAN ETFS  Scottish Mortgage

Very weak diversification

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

Pair Corralation between JPMORGAN ETFS and Scottish Mortgage

Assuming the 90 days trading horizon JPMORGAN ETFS is expected to generate 10.44 times less return on investment than Scottish Mortgage. But when comparing it to its historical volatility, JPMORGAN ETFS ICAV is 1.8 times less risky than Scottish Mortgage. It trades about 0.02 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  97,040  in Scottish Mortgage Investment on October 11, 2024 and sell it today you would earn a total of  2,080  from holding Scottish Mortgage Investment or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

JPMORGAN ETFS ICAV  vs.  Scottish Mortgage Investment

JPMORGAN ETFS ICAV

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMORGAN ETFS ICAV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, JPMORGAN ETFS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Scottish Mortgage

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain 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 JPMORGAN ETFS and Scottish Mortgage

The main advantage of trading using opposite JPMORGAN ETFS and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMORGAN ETFS 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 JPMORGAN ETFS ICAV 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.