Correlation Between IShares MSCI and CT Private

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

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

Diversification Opportunities for IShares MSCI and CT Private

0.45

Correlation Coefficient

IShares MSCI  CT Private

Very weak diversification

The 3 months correlation between IShares and CTPE is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Japan 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 IShares 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 iShares MSCI Japan 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 IShares MSCI i.e., IShares MSCI and CT Private go up and down completely randomly.

Pair Corralation between IShares MSCI and CT Private

Assuming the 90 days trading horizon iShares MSCI Japan is expected to generate 0.61 times more return on investment than CT Private. However, iShares MSCI Japan is 1.65 times less risky than CT Private. It trades about 0.01 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  492.00  in iShares MSCI Japan on December 30, 2024 and sell it today you would earn a total of  1.00  from holding iShares MSCI Japan or generate 0.2% return on investment over 90 days.

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

iShares MSCI Japan  vs.  CT Private Equity

iShares MSCI Japan

Risk-Adjusted Performance

Very Weak

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

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 IShares MSCI and CT Private

The main advantage of trading using opposite IShares MSCI and CT Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 iShares MSCI Japan 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.