Correlation Between Firstrand and CoreShares TotalWldStock

Can any of the company-specific risk be diversified away by investing in both Firstrand and CoreShares TotalWldStock 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 Firstrand and CoreShares TotalWldStock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Firstrand and CoreShares TotalWldStock ETF, you can compare the effects of market volatilities on Firstrand and CoreShares TotalWldStock 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 Firstrand with a short position of CoreShares TotalWldStock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firstrand and CoreShares TotalWldStock.

Diversification Opportunities for Firstrand and CoreShares TotalWldStock

-0.49

Correlation Coefficient

Firstrand  CoreShares TotalWldStock

Very good diversification

The 3 months correlation between Firstrand and CoreShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Firstrand and CoreShares TotalWldStock ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreShares TotalWldStock and Firstrand 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 Firstrand are associated (or correlated) with CoreShares TotalWldStock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreShares TotalWldStock has no effect on the direction of Firstrand i.e., Firstrand and CoreShares TotalWldStock go up and down completely randomly.

Pair Corralation between Firstrand and CoreShares TotalWldStock

Assuming the 90 days trading horizon Firstrand is expected to under-perform the CoreShares TotalWldStock. In addition to that, Firstrand is 1.43 times more volatile than CoreShares TotalWldStock ETF. It trades about -0.01 of its total potential returns per unit of risk. CoreShares TotalWldStock ETF is currently generating about 0.1 per unit of volatility. If you would invest  147,800  in CoreShares TotalWldStock ETF on September 13, 2024 and sell it today you would earn a total of  8,300  from holding CoreShares TotalWldStock ETF or generate 5.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Firstrand  vs.  CoreShares TotalWldStock ETF

Firstrand

Risk-Adjusted Performance

0 of 100

Very Weak

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

CoreShares TotalWldStock

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CoreShares TotalWldStock ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, CoreShares TotalWldStock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Firstrand and CoreShares TotalWldStock

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

The idea behind Firstrand and CoreShares TotalWldStock ETF 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.