Correlation Between CoreShares Income and CoreShares TotalWldStock

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

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

Diversification Opportunities for CoreShares Income and CoreShares TotalWldStock

-0.24

Correlation Coefficient

CoreShares Income  CoreShares TotalWldStock

Very good diversification

The 3 months correlation between CoreShares and CoreShares is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CoreShares Income AMETF and CoreShares TotalWldStock ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreShares TotalWldStock and CoreShares Income 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 Income AMETF 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 CoreShares Income i.e., CoreShares Income and CoreShares TotalWldStock go up and down completely randomly.

Pair Corralation between CoreShares Income and CoreShares TotalWldStock

Assuming the 90 days trading horizon CoreShares Income AMETF is expected to under-perform the CoreShares TotalWldStock. But the etf apears to be less risky and, when comparing its historical volatility, CoreShares Income AMETF is 3.24 times less risky than CoreShares TotalWldStock. The etf trades about -0.03 of its potential returns per unit of risk. The CoreShares TotalWldStock ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  147,400  in CoreShares TotalWldStock ETF on September 14, 2024 and sell it today you would earn a total of  8,500  from holding CoreShares TotalWldStock ETF or generate 5.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CoreShares Income AMETF  vs.  CoreShares TotalWldStock ETF

CoreShares Income AMETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoreShares Income AMETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CoreShares Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 CoreShares Income and CoreShares TotalWldStock

The main advantage of trading using opposite CoreShares Income and CoreShares TotalWldStock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CoreShares Income 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 CoreShares Income AMETF 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.