Correlation Between Coreshares Index and Coronation Balanced

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

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

Diversification Opportunities for Coreshares Index and Coronation Balanced

0.56

Correlation Coefficient

Coreshares Index  Coronation Balanced

Very weak diversification

The 3 months correlation between Coreshares and Coronation is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and Coronation Balanced Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Balanced Plus and Coreshares Index 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 Coreshares Index Tracker are associated (or correlated) with Coronation Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Balanced Plus has no effect on the direction of Coreshares Index i.e., Coreshares Index and Coronation Balanced go up and down completely randomly.

Pair Corralation between Coreshares Index and Coronation Balanced

Assuming the 90 days trading horizon Coreshares Index Tracker is expected to generate 1.56 times more return on investment than Coronation Balanced. However, Coreshares Index is 1.56 times more volatile than Coronation Balanced Plus. It trades about 0.03 of its potential returns per unit of risk. Coronation Balanced Plus is currently generating about 0.02 per unit of risk. If you would invest  109,969  in Coreshares Index Tracker on December 5, 2024 and sell it today you would earn a total of  1,831  from holding Coreshares Index Tracker or generate 1.67% return on investment over 90 days.

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

Coreshares Index Tracker  vs.  Coronation Balanced Plus

Coreshares Index Tracker

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coreshares Index Tracker are ranked lower than 2 (%) 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.

Coronation Balanced Plus

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Balanced Plus are ranked lower than 1 (%) 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.

Pair Trading with Coreshares Index and Coronation Balanced

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

The idea behind Coreshares Index Tracker and Coronation Balanced Plus 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 Commodity Directory module to find actively traded commodities issued by global exchanges.