Correlation Between CoreShares TotalWldStock and Satrix MSCI

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

Diversification Opportunities for CoreShares TotalWldStock and Satrix MSCI

0.99

Correlation Coefficient

CoreShares TotalWldStock  Satrix MSCI

No risk reduction

The 3 months correlation between CoreShares and Satrix is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding CoreShares TotalWldStock ETF and Satrix MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satrix MSCI World 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satrix MSCI World has no effect on the direction of CoreShares TotalWldStock i.e., CoreShares TotalWldStock and Satrix MSCI go up and down completely randomly.

Pair Corralation between CoreShares TotalWldStock and Satrix MSCI

Assuming the 90 days trading horizon CoreShares TotalWldStock is expected to generate 1.12 times less return on investment than Satrix MSCI. But when comparing it to its historical volatility, CoreShares TotalWldStock ETF is 1.02 times less risky than Satrix MSCI. It trades about 0.09 of its potential returns per unit of risk. Satrix MSCI World is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  627,200  in Satrix MSCI World on September 24, 2024 and sell it today you would earn a total of  347,800  from holding Satrix MSCI World or generate 55.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

CoreShares TotalWldStock ETF  vs.  Satrix MSCI World

CoreShares TotalWldStock

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CoreShares TotalWldStock ETF are ranked lower than 7 (%) 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 new stock price disturbance, may contribute to short-term losses for the investors.

Satrix MSCI World

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with CoreShares TotalWldStock and Satrix MSCI

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

The idea behind CoreShares TotalWldStock ETF and Satrix MSCI World 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 Anywhere module to track or share privately all of your investments from the convenience of any device.