Correlation Between CoreShares Preference and Standard Bank

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

Diversification Opportunities for CoreShares Preference and Standard Bank

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Correlation Coefficient

CoreShares Preference  Standard Bank

Pay attention - limited upside

The 3 months correlation between CoreShares and Standard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CoreShares Preference Share 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 Preference 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 Preference Share 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 Preference i.e., CoreShares Preference and Standard Bank go up and down completely randomly.

Pair Corralation between CoreShares Preference and Standard Bank

Assuming the 90 days trading horizon CoreShares Preference Share is expected to under-perform the Standard Bank. But the etf apears to be less risky and, when comparing its historical volatility, CoreShares Preference Share is 2.25 times less risky than Standard Bank. The etf trades about -0.02 of its potential returns per unit of risk. The Standard Bank Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  882,826  in Standard Bank Group on December 4, 2024 and sell it today you would earn a total of  49,174  from holding Standard Bank Group or generate 5.57% return on investment over 90 days.

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

CoreShares Preference Share  vs.  Standard Bank Group

CoreShares Preference

Risk-Adjusted Performance

Very Weak

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

Standard Bank Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standard Bank Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Preference and Standard Bank

The main advantage of trading using opposite CoreShares Preference and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CoreShares Preference 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 Preference Share 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.