Correlation Between CoreShares TotalWldStock and Standard Bank

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

Diversification Opportunities for CoreShares TotalWldStock and Standard Bank

0.22

Correlation Coefficient

CoreShares TotalWldStock  Standard Bank

Modest diversification

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

Pair Corralation between CoreShares TotalWldStock and Standard Bank

Assuming the 90 days trading horizon CoreShares TotalWldStock ETF is expected to generate 0.64 times more return on investment than Standard Bank. However, CoreShares TotalWldStock ETF is 1.56 times less risky than Standard Bank. It trades about 0.13 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.06 per unit of risk. If you would invest  151,100  in CoreShares TotalWldStock ETF on October 20, 2024 and sell it today you would earn a total of  10,100  from holding CoreShares TotalWldStock ETF or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

CoreShares TotalWldStock ETF  vs.  Standard Bank Group

CoreShares TotalWldStock

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CoreShares TotalWldStock ETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, CoreShares TotalWldStock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Standard Bank Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Bank Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Standard Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CoreShares TotalWldStock and Standard Bank

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

The idea behind CoreShares TotalWldStock ETF and Standard Bank Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.