Correlation Between Downing Strategic and CT Private

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

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

Diversification Opportunities for Downing Strategic and CT Private

-0.08

Correlation Coefficient

Downing Strategic  CT Private

Good diversification

The 3 months correlation between Downing and CTPE is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Downing Strategic Micro Cap 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 Downing Strategic 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 Downing Strategic Micro Cap 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 Downing Strategic i.e., Downing Strategic and CT Private go up and down completely randomly.

Pair Corralation between Downing Strategic and CT Private

Assuming the 90 days trading horizon Downing Strategic Micro Cap is expected to under-perform the CT Private. In addition to that, Downing Strategic is 4.79 times more volatile than CT Private Equity. It trades about -0.06 of its total potential returns per unit of risk. CT Private Equity is currently generating about 0.02 per unit of volatility. If you would invest  45,410  in CT Private Equity on September 5, 2024 and sell it today you would earn a total of  990.00  from holding CT Private Equity or generate 2.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

Downing Strategic Micro Cap  vs.  CT Private Equity

Downing Strategic Micro

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Downing Strategic Micro Cap are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Downing Strategic 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

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CT Private Equity are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CT Private may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Downing Strategic and CT Private

The main advantage of trading using opposite Downing Strategic and CT Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Downing Strategic 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 Downing Strategic Micro Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.