Correlation Between Scottish Mortgage and CT Private

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

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

Diversification Opportunities for Scottish Mortgage and CT Private

0.65

Correlation Coefficient

Scottish Mortgage  CT Private

Poor diversification

The 3 months correlation between Scottish and CTPE is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment and CT Private Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CT Private Equity and Scottish Mortgage 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 Scottish Mortgage Investment are associated (or correlated) with CT Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CT Private Equity has no effect on the direction of Scottish Mortgage i.e., Scottish Mortgage and CT Private go up and down completely randomly.

Pair Corralation between Scottish Mortgage and CT Private

Assuming the 90 days trading horizon Scottish Mortgage Investment is expected to generate 1.3 times more return on investment than CT Private. However, Scottish Mortgage is 1.3 times more volatile than CT Private Equity. It trades about 0.03 of its potential returns per unit of risk. CT Private Equity is currently generating about -0.04 per unit of risk. If you would invest  93,940  in Scottish Mortgage Investment on December 30, 2024 and sell it today you would earn a total of  2,140  from holding Scottish Mortgage Investment or generate 2.28% return on investment over 90 days.

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

Scottish Mortgage Investment  vs.  CT Private Equity

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.

CT Private Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days CT Private Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CT Private is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Scottish Mortgage and CT Private

The main advantage of trading using opposite Scottish Mortgage and CT Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage position performs unexpectedly, CT Private 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 CT Private will offset losses from the drop in CT Private's long position.

The idea behind Scottish Mortgage Investment and CT Private Equity 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.