Correlation Between Coreshares Index and Octodec

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

Diversification Opportunities for Coreshares Index and Octodec

-0.46

Correlation Coefficient

Coreshares Index  Octodec

Very good diversification

The 3 months correlation between Coreshares and Octodec is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and Octodec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octodec 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 Octodec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octodec has no effect on the direction of Coreshares Index i.e., Coreshares Index and Octodec go up and down completely randomly.

Pair Corralation between Coreshares Index and Octodec

Assuming the 90 days trading horizon Coreshares Index is expected to generate 1.71 times less return on investment than Octodec. But when comparing it to its historical volatility, Coreshares Index Tracker is 1.85 times less risky than Octodec. It trades about 0.03 of its potential returns per unit of risk. Octodec is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  95,687  in Octodec on September 21, 2024 and sell it today you would earn a total of  20,813  from holding Octodec or generate 21.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.08%
Values	Daily Returns

Coreshares Index Tracker  vs.  Octodec

Coreshares Index Tracker

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coreshares Index Tracker are ranked lower than 4 (%) 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.

Octodec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Octodec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Octodec is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Coreshares Index and Octodec

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

The idea behind Coreshares Index Tracker and Octodec 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.

Check out your portfolio center.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.