Correlation Between Coreshares Index and NewWave EUR

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

Diversification Opportunities for Coreshares Index and NewWave EUR

0.71

Correlation Coefficient

Coreshares Index  NewWave EUR

Poor diversification

The 3 months correlation between Coreshares and NewWave is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and NewWave EUR Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewWave EUR Currency 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 NewWave EUR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewWave EUR Currency has no effect on the direction of Coreshares Index i.e., Coreshares Index and NewWave EUR go up and down completely randomly.

Pair Corralation between Coreshares Index and NewWave EUR

Assuming the 90 days trading horizon Coreshares Index Tracker is expected to under-perform the NewWave EUR. In addition to that, Coreshares Index is 2.07 times more volatile than NewWave EUR Currency. It trades about 0.0 of its total potential returns per unit of risk. NewWave EUR Currency is currently generating about 0.04 per unit of volatility. If you would invest  192,900  in NewWave EUR Currency on October 27, 2024 and sell it today you would earn a total of  2,200  from holding NewWave EUR Currency or generate 1.14% return on investment over 90 days.

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

Coreshares Index Tracker  vs.  NewWave EUR Currency

Coreshares Index Tracker

Risk-Adjusted Performance

0 of 100

Very 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.

NewWave EUR Currency

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NewWave EUR Currency are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, NewWave EUR 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 NewWave EUR

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

The idea behind Coreshares Index Tracker and NewWave EUR Currency 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..