Correlation Between Coronation Balanced and Coronation Global

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

By analyzing existing cross correlation between Coronation Balanced Plus and Coronation Global Opportunities, you can compare the effects of market volatilities on Coronation Balanced and Coronation Global 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 Balanced with a short position of Coronation Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coronation Balanced and Coronation Global.

Diversification Opportunities for Coronation Balanced and Coronation Global

0.76

Correlation Coefficient

Coronation Balanced  Coronation Global

Poor diversification

The 3 months correlation between Coronation and Coronation is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Balanced Plus and Coronation Global Opportunitie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Global and Coronation Balanced 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 Balanced Plus are associated (or correlated) with Coronation Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Global has no effect on the direction of Coronation Balanced i.e., Coronation Balanced and Coronation Global go up and down completely randomly.

Pair Corralation between Coronation Balanced and Coronation Global

Assuming the 90 days trading horizon Coronation Balanced Plus is expected to under-perform the Coronation Global. But the fund apears to be less risky and, when comparing its historical volatility, Coronation Balanced Plus is 1.67 times less risky than Coronation Global. The fund trades about -0.04 of its potential returns per unit of risk. The Coronation Global Opportunities is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  23,136  in Coronation Global Opportunities on October 20, 2024 and sell it today you would earn a total of  173.00  from holding Coronation Global Opportunities or generate 0.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Coronation Balanced Plus  vs.  Coronation Global Opportunitie

Coronation Balanced Plus

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Balanced Plus are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Coronation Balanced is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Coronation Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Global Opportunities are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly sluggish basic indicators, Coronation Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Coronation Balanced and Coronation Global

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

The idea behind Coronation Balanced Plus and Coronation Global Opportunities 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.