Correlation Between Xtrackers MSCI and Scottish Mortgage

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

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

Diversification Opportunities for Xtrackers MSCI and Scottish Mortgage

0.0

Correlation Coefficient

Xtrackers MSCI  Scottish Mortgage

Pay attention - limited upside

The 3 months correlation between Xtrackers and Scottish is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers 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 Xtrackers MSCI 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 Xtrackers 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 Xtrackers MSCI i.e., Xtrackers MSCI and Scottish Mortgage go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and Scottish Mortgage

Assuming the 90 days trading horizon Xtrackers MSCI is expected to generate 0.66 times more return on investment than Scottish Mortgage. However, Xtrackers MSCI is 1.52 times less risky than Scottish Mortgage. It trades about 0.11 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.03 per unit of risk. If you would invest  4,655  in Xtrackers MSCI on December 30, 2024 and sell it today you would earn a total of  431.00  from holding Xtrackers MSCI or generate 9.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Xtrackers MSCI  vs.  Scottish Mortgage Investment

Xtrackers MSCI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Xtrackers MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Xtrackers MSCI and Scottish Mortgage

The main advantage of trading using opposite Xtrackers MSCI and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers MSCI 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 Xtrackers 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.