Correlation Between Sanlam Global and Global Opportunities

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

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

Diversification Opportunities for Sanlam Global and Global Opportunities

-0.5

Correlation Coefficient

Sanlam Global  Global Opportunities

Very good diversification

The 3 months correlation between Sanlam and Global is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam Global Artificial and Global Opportunities Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunities and Sanlam Global 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 Sanlam Global Artificial are associated (or correlated) with Global Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunities has no effect on the direction of Sanlam Global i.e., Sanlam Global and Global Opportunities go up and down completely randomly.

Pair Corralation between Sanlam Global and Global Opportunities

Assuming the 90 days trading horizon Sanlam Global Artificial is expected to generate 0.7 times more return on investment than Global Opportunities. However, Sanlam Global Artificial is 1.43 times less risky than Global Opportunities. It trades about 0.22 of its potential returns per unit of risk. Global Opportunities Trust is currently generating about -0.07 per unit of risk. If you would invest  33,061  in Sanlam Global Artificial on September 22, 2024 and sell it today you would earn a total of  4,798  from holding Sanlam Global Artificial or generate 14.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Sanlam Global Artificial  vs.  Global Opportunities Trust

Sanlam Global Artificial

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sanlam Global Artificial are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak technical and fundamental indicators, Sanlam Global reported solid returns over the last few months and may actually be approaching a breakup point.

Global Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Opportunities Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Sanlam Global and Global Opportunities

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

The idea behind Sanlam Global Artificial and Global Opportunities Trust 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..