Correlation Between Absa Multi and Coreshares Index

Can any of the company-specific risk be diversified away by investing in both Absa Multi and Coreshares Index 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 Absa Multi and Coreshares Index into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Absa Multi Managed and Coreshares Index Tracker, you can compare the effects of market volatilities on Absa Multi and Coreshares Index 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 Absa Multi with a short position of Coreshares Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Multi and Coreshares Index.

Diversification Opportunities for Absa Multi and Coreshares Index

-0.3

Correlation Coefficient

Absa Multi  Coreshares Index

Very good diversification

The 3 months correlation between Absa and Coreshares is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Absa Multi Managed and Coreshares Index Tracker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coreshares Index Tracker and Absa Multi 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 Absa Multi Managed are associated (or correlated) with Coreshares Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coreshares Index Tracker has no effect on the direction of Absa Multi i.e., Absa Multi and Coreshares Index go up and down completely randomly.

Pair Corralation between Absa Multi and Coreshares Index

Assuming the 90 days trading horizon Absa Multi Managed is expected to under-perform the Coreshares Index. But the fund apears to be less risky and, when comparing its historical volatility, Absa Multi Managed is 2.11 times less risky than Coreshares Index. The fund trades about -0.15 of its potential returns per unit of risk. The Coreshares Index Tracker is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  111,400  in Coreshares Index Tracker on October 9, 2024 and sell it today you would earn a total of  1,900  from holding Coreshares Index Tracker or generate 1.71% return on investment over 90 days.

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

Absa Multi Managed  vs.  Coreshares Index Tracker

Absa Multi Managed

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Multi Managed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Absa Multi is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Coreshares Index Tracker

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coreshares Index Tracker are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Coreshares Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absa Multi and Coreshares Index

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

The idea behind Absa Multi Managed and Coreshares Index Tracker 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.