Correlation Between Coreshares Index and Sygnia

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

Diversification Opportunities for Coreshares Index and Sygnia

0.42

Correlation Coefficient

Coreshares Index  Sygnia

Very weak diversification

The 3 months correlation between Coreshares and Sygnia is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and Sygnia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sygnia 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 Sygnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sygnia has no effect on the direction of Coreshares Index i.e., Coreshares Index and Sygnia go up and down completely randomly.

Pair Corralation between Coreshares Index and Sygnia

Assuming the 90 days trading horizon Coreshares Index is expected to generate 14.49 times less return on investment than Sygnia. But when comparing it to its historical volatility, Coreshares Index Tracker is 1.75 times less risky than Sygnia. It trades about 0.01 of its potential returns per unit of risk. Sygnia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  203,000  in Sygnia on September 24, 2024 and sell it today you would earn a total of  24,000  from holding Sygnia or generate 11.82% 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.  Sygnia

Coreshares Index Tracker

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coreshares Index Tracker are ranked lower than 1 (%) 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.

Sygnia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sygnia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sygnia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Coreshares Index and Sygnia

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

The idea behind Coreshares Index Tracker and Sygnia 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.