Correlation Between Xtrackers MSCI and CT Private

Can any of the company-specific risk be diversified away by investing in both Xtrackers 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 Xtrackers 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 Xtrackers MSCI and CT Private Equity, you can compare the effects of market volatilities on Xtrackers 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 Xtrackers MSCI with a short position of CT Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers MSCI and CT Private.

Diversification Opportunities for Xtrackers MSCI and CT Private

-0.3

Correlation Coefficient

Xtrackers MSCI  CT Private

Very good diversification

The 3 months correlation between Xtrackers and CTPE is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers MSCI 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 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 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 Xtrackers MSCI i.e., Xtrackers MSCI and CT Private go up and down completely randomly.

Pair Corralation between Xtrackers MSCI and CT Private

Assuming the 90 days trading horizon Xtrackers MSCI is expected to generate 0.83 times more return on investment than CT Private. However, Xtrackers MSCI is 1.2 times less risky than CT Private. It trades about 0.13 of its potential returns per unit of risk. CT Private Equity is currently generating about -0.02 per unit of risk. If you would invest  4,695  in Xtrackers MSCI on December 26, 2024 and sell it today you would earn a total of  461.00  from holding Xtrackers MSCI or generate 9.82% return on investment over 90 days.

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

Xtrackers MSCI  vs.  CT Private Equity

Xtrackers MSCI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI are ranked lower than 9 (%) 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.

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 Xtrackers MSCI and CT Private

The main advantage of trading using opposite Xtrackers MSCI and CT Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers 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 Xtrackers MSCI 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.