Correlation Between Coreshares Index and Discovery Aggressive

Can any of the company-specific risk be diversified away by investing in both Coreshares Index and Discovery Aggressive 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 Discovery Aggressive 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 Discovery Aggressive Dynamic, you can compare the effects of market volatilities on Coreshares Index and Discovery Aggressive 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 Discovery Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coreshares Index and Discovery Aggressive.

Diversification Opportunities for Coreshares Index and Discovery Aggressive

0.45

Correlation Coefficient

Coreshares Index  Discovery Aggressive

Very weak diversification

The 3 months correlation between Coreshares and Discovery is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and Discovery Aggressive Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discovery Aggressive 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 Discovery Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discovery Aggressive has no effect on the direction of Coreshares Index i.e., Coreshares Index and Discovery Aggressive go up and down completely randomly.

Pair Corralation between Coreshares Index and Discovery Aggressive

Assuming the 90 days trading horizon Coreshares Index is expected to generate 1.18 times less return on investment than Discovery Aggressive. In addition to that, Coreshares Index is 1.95 times more volatile than Discovery Aggressive Dynamic. It trades about 0.07 of its total potential returns per unit of risk. Discovery Aggressive Dynamic is currently generating about 0.16 per unit of volatility. If you would invest  157.00  in Discovery Aggressive Dynamic on September 16, 2024 and sell it today you would earn a total of  8.00  from holding Discovery Aggressive Dynamic or generate 5.1% 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.  Discovery Aggressive Dynamic

Coreshares Index Tracker

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coreshares Index Tracker are ranked lower than 5 (%) 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.

Discovery Aggressive

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Discovery Aggressive Dynamic are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong forward-looking signals, Discovery Aggressive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Coreshares Index and Discovery Aggressive

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

The idea behind Coreshares Index Tracker and Discovery Aggressive Dynamic 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.