Correlation Between CoreShares TotalWldStock and Coronation Smaller

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

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

Diversification Opportunities for CoreShares TotalWldStock and Coronation Smaller

0.47

Correlation Coefficient

CoreShares TotalWldStock  Coronation Smaller

Very weak diversification

The 3 months correlation between CoreShares and Coronation is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CoreShares TotalWldStock ETF and Coronation Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Smaller and CoreShares TotalWldStock 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 TotalWldStock ETF are associated (or correlated) with Coronation Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Smaller has no effect on the direction of CoreShares TotalWldStock i.e., CoreShares TotalWldStock and Coronation Smaller go up and down completely randomly.

Pair Corralation between CoreShares TotalWldStock and Coronation Smaller

Assuming the 90 days trading horizon CoreShares TotalWldStock ETF is expected to generate 1.12 times more return on investment than Coronation Smaller. However, CoreShares TotalWldStock is 1.12 times more volatile than Coronation Smaller Companies. It trades about -0.06 of its potential returns per unit of risk. Coronation Smaller Companies is currently generating about -0.08 per unit of risk. If you would invest  158,900  in CoreShares TotalWldStock ETF on December 30, 2024 and sell it today you would lose (4,700) from holding CoreShares TotalWldStock ETF or give up 2.96% of portfolio value over 90 days.

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

CoreShares TotalWldStock ETF  vs.  Coronation Smaller Companies

CoreShares TotalWldStock

Risk-Adjusted Performance

Very Weak

Over the last 90 days CoreShares TotalWldStock ETF has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Coronation Smaller

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coronation Smaller Companies has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Coronation Smaller is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CoreShares TotalWldStock and Coronation Smaller

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

The idea behind CoreShares TotalWldStock ETF and Coronation Smaller Companies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.