Correlation Between Coronation Smaller and CoreShares TotalWldStock

Can any of the company-specific risk be diversified away by investing in both Coronation Smaller and CoreShares TotalWldStock 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 Coronation Smaller and CoreShares TotalWldStock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coronation Smaller Companies and CoreShares TotalWldStock ETF, you can compare the effects of market volatilities on Coronation Smaller and CoreShares TotalWldStock 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 Coronation Smaller with a short position of CoreShares TotalWldStock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coronation Smaller and CoreShares TotalWldStock.

Diversification Opportunities for Coronation Smaller and CoreShares TotalWldStock

0.49

Correlation Coefficient

Coronation Smaller  CoreShares TotalWldStock

Very weak diversification

The 3 months correlation between Coronation and CoreShares is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Smaller Companies and CoreShares TotalWldStock ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreShares TotalWldStock and Coronation Smaller 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 Coronation Smaller Companies are associated (or correlated) with CoreShares TotalWldStock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreShares TotalWldStock has no effect on the direction of Coronation Smaller i.e., Coronation Smaller and CoreShares TotalWldStock go up and down completely randomly.

Pair Corralation between Coronation Smaller and CoreShares TotalWldStock

Assuming the 90 days trading horizon Coronation Smaller is expected to generate 7.37 times less return on investment than CoreShares TotalWldStock. But when comparing it to its historical volatility, Coronation Smaller Companies is 1.56 times less risky than CoreShares TotalWldStock. It trades about 0.03 of its potential returns per unit of risk. CoreShares TotalWldStock ETF is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  149,600  in CoreShares TotalWldStock ETF on October 22, 2024 and sell it today you would earn a total of  11,600  from holding CoreShares TotalWldStock ETF or generate 7.75% return on investment over 90 days.

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

Coronation Smaller Companies  vs.  CoreShares TotalWldStock ETF

Coronation Smaller

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Smaller Companies are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Coronation Smaller is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

CoreShares TotalWldStock

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoreShares TotalWldStock ETF are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, CoreShares TotalWldStock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Coronation Smaller and CoreShares TotalWldStock

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

The idea behind Coronation Smaller Companies and CoreShares TotalWldStock 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.