Correlation Between Tetragon Financial and IShares MSCI

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

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

Diversification Opportunities for Tetragon Financial and IShares MSCI

0.08

Correlation Coefficient

Tetragon Financial  IShares MSCI

Significant diversification

The 3 months correlation between Tetragon and IShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and Tetragon Financial 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 Tetragon Financial Group are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Tetragon Financial i.e., Tetragon Financial and IShares MSCI go up and down completely randomly.

Pair Corralation between Tetragon Financial and IShares MSCI

Assuming the 90 days trading horizon Tetragon Financial Group is expected to generate 3.27 times more return on investment than IShares MSCI. However, Tetragon Financial is 3.27 times more volatile than iShares MSCI USA. It trades about 0.26 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.12 per unit of risk. If you would invest  1,425  in Tetragon Financial Group on October 22, 2024 and sell it today you would earn a total of  210.00  from holding Tetragon Financial Group or generate 14.74% return on investment over 90 days.

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

Tetragon Financial Group  vs.  iShares MSCI USA

Tetragon Financial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Tetragon Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI USA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares MSCI 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 Tetragon Financial and IShares MSCI

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

The idea behind Tetragon Financial Group and iShares MSCI USA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.