Correlation Between CT Private and VanEck Defense

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

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

Diversification Opportunities for CT Private and VanEck Defense

-0.36

Correlation Coefficient

CT Private  VanEck Defense

Very good diversification

The 3 months correlation between CTPE and VanEck is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CT Private Equity and VanEck Defense ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Defense ETF and CT Private 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 CT Private Equity are associated (or correlated) with VanEck Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Defense ETF has no effect on the direction of CT Private i.e., CT Private and VanEck Defense go up and down completely randomly.

Pair Corralation between CT Private and VanEck Defense

Assuming the 90 days trading horizon CT Private Equity is expected to under-perform the VanEck Defense. But the etf apears to be less risky and, when comparing its historical volatility, CT Private Equity is 1.08 times less risky than VanEck Defense. The etf trades about 0.0 of its potential returns per unit of risk. The VanEck Defense ETF is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,620  in VanEck Defense ETF on December 22, 2024 and sell it today you would earn a total of  824.00  from holding VanEck Defense ETF or generate 22.76% return on investment over 90 days.

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

CT Private Equity  vs.  VanEck Defense ETF

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

VanEck Defense ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Defense ETF are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, VanEck Defense unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CT Private and VanEck Defense

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

The idea behind CT Private Equity and VanEck Defense ETF 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.