Correlation Between Coreshares Index and NewWave USD

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

Diversification Opportunities for Coreshares Index and NewWave USD

-0.22

Correlation Coefficient

Coreshares Index  NewWave USD

Very good diversification

The 3 months correlation between Coreshares and NewWave is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and NewWave USD Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewWave USD 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 USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewWave USD Currency has no effect on the direction of Coreshares Index i.e., Coreshares Index and NewWave USD go up and down completely randomly.

Pair Corralation between Coreshares Index and NewWave USD

Assuming the 90 days trading horizon Coreshares Index Tracker is expected to generate 1.28 times more return on investment than NewWave USD. However, Coreshares Index is 1.28 times more volatile than NewWave USD Currency. It trades about 0.03 of its potential returns per unit of risk. NewWave USD Currency is currently generating about -0.07 per unit of risk. If you would invest  111,161  in Coreshares Index Tracker on December 27, 2024 and sell it today you would earn a total of  1,339  from holding Coreshares Index Tracker or generate 1.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Coreshares Index Tracker  vs.  NewWave USD Currency

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.

NewWave USD Currency

Risk-Adjusted Performance

Very Weak

Over the last 90 days NewWave USD Currency has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NewWave USD 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 USD

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

The idea behind Coreshares Index Tracker and NewWave USD 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 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..