Correlation Between Coronation Financial and Coronation Global

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

Diversification Opportunities for Coronation Financial and Coronation Global

-0.04

Correlation Coefficient

Coronation Financial  Coronation Global

Good diversification

The 3 months correlation between Coronation and Coronation is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Financial and Coronation Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Global Equity and Coronation 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 Coronation Financial 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 Equity has no effect on the direction of Coronation Financial i.e., Coronation Financial and Coronation Global go up and down completely randomly.

Pair Corralation between Coronation Financial and Coronation Global

Assuming the 90 days trading horizon Coronation Financial is expected to under-perform the Coronation Global. But the fund apears to be less risky and, when comparing its historical volatility, Coronation Financial is 1.1 times less risky than Coronation Global. The fund trades about -0.06 of its potential returns per unit of risk. The Coronation Global Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  266.00  in Coronation Global Equity on October 24, 2024 and sell it today you would earn a total of  6.00  from holding Coronation Global Equity or generate 2.26% return on investment over 90 days.

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

Coronation Financial  vs.  Coronation Global Equity

Coronation Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coronation Financial has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Coronation Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Coronation Global Equity

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Global Equity are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Coronation Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coronation Financial and Coronation Global

The main advantage of trading using opposite Coronation Financial and Coronation Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coronation Financial 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 Financial and Coronation Global 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.