Correlation Between CoreShares TotalWldStock and Satrix 40

Can any of the company-specific risk be diversified away by investing in both CoreShares TotalWldStock and Satrix 40 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 Satrix 40 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 Satrix 40 ETF, you can compare the effects of market volatilities on CoreShares TotalWldStock and Satrix 40 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 Satrix 40. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoreShares TotalWldStock and Satrix 40.

Diversification Opportunities for CoreShares TotalWldStock and Satrix 40

-0.32

Correlation Coefficient

CoreShares TotalWldStock  Satrix 40

Very good diversification

The 3 months correlation between CoreShares and Satrix is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CoreShares TotalWldStock ETF and Satrix 40 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satrix 40 ETF 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 Satrix 40. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satrix 40 ETF has no effect on the direction of CoreShares TotalWldStock i.e., CoreShares TotalWldStock and Satrix 40 go up and down completely randomly.

Pair Corralation between CoreShares TotalWldStock and Satrix 40

Assuming the 90 days trading horizon CoreShares TotalWldStock ETF is expected to generate 1.25 times more return on investment than Satrix 40. However, CoreShares TotalWldStock is 1.25 times more volatile than Satrix 40 ETF. It trades about 0.14 of its potential returns per unit of risk. Satrix 40 ETF is currently generating about -0.03 per unit of risk. If you would invest  147,000  in CoreShares TotalWldStock ETF on September 25, 2024 and sell it today you would earn a total of  12,400  from holding CoreShares TotalWldStock ETF or generate 8.44% return on investment over 90 days.

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

CoreShares TotalWldStock ETF  vs.  Satrix 40 ETF

CoreShares TotalWldStock

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoreShares TotalWldStock ETF are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish fundamental drivers, CoreShares TotalWldStock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Satrix 40 ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Satrix 40 ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Satrix 40 is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with CoreShares TotalWldStock and Satrix 40

The main advantage of trading using opposite CoreShares TotalWldStock and Satrix 40 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CoreShares TotalWldStock position performs unexpectedly, Satrix 40 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 Satrix 40 will offset losses from the drop in Satrix 40's long position.

The idea behind CoreShares TotalWldStock ETF and Satrix 40 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.