Correlation Between Old Republic and Scottish Mortgage

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

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

Diversification Opportunities for Old Republic and Scottish Mortgage

0.6

Correlation Coefficient

Old Republic  Scottish Mortgage

Poor diversification

The 3 months correlation between Old and Scottish is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage and Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Scottish Mortgage go up and down completely randomly.

Pair Corralation between Old Republic and Scottish Mortgage

Considering the 90-day investment horizon Old Republic International is expected to generate 0.55 times more return on investment than Scottish Mortgage. However, Old Republic International is 1.81 times less risky than Scottish Mortgage. It trades about 0.16 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.07 per unit of risk. If you would invest  3,345  in Old Republic International on December 19, 2024 and sell it today you would earn a total of  381.00  from holding Old Republic International or generate 11.39% return on investment over 90 days.

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

Old Republic International  vs.  Scottish Mortgage Investment

Old Republic Interna

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Old Republic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Scottish Mortgage

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Scottish Mortgage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Old Republic and Scottish Mortgage

The main advantage of trading using opposite Old Republic and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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 Old Republic International 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.