Correlation Between Coreshares Index and Coronation Global

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

Diversification Opportunities for Coreshares Index and Coronation Global

0.33

Correlation Coefficient

Coreshares Index  Coronation Global

Weak diversification

The 3 months correlation between Coreshares and Coronation is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and Coronation Global Optimum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Global Optimum 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 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 Optimum has no effect on the direction of Coreshares Index i.e., Coreshares Index and Coronation Global go up and down completely randomly.

Pair Corralation between Coreshares Index and Coronation Global

Assuming the 90 days trading horizon Coreshares Index Tracker is expected to generate 0.9 times more return on investment than Coronation Global. However, Coreshares Index Tracker is 1.11 times less risky than Coronation Global. It trades about 0.06 of its potential returns per unit of risk. Coronation Global Optimum is currently generating about 0.05 per unit of risk. If you would invest  111,161  in Coreshares Index Tracker on October 26, 2024 and sell it today you would earn a total of  939.00  from holding Coreshares Index Tracker or generate 0.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Coreshares Index Tracker  vs.  Coronation Global Optimum

Coreshares Index Tracker

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Coreshares Index Tracker has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Global Optimum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Global Optimum are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Coronation Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Coreshares Index and Coronation Global

The main advantage of trading using opposite Coreshares Index and Coronation Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coreshares Index 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 Coreshares Index Tracker and Coronation Global Optimum 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.