Correlation Between SLM Corp and CoreShares TotalWldStock

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

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

Diversification Opportunities for SLM Corp and CoreShares TotalWldStock

-0.61

Correlation Coefficient

SLM Corp  CoreShares TotalWldStock

Excellent diversification

The 3 months correlation between SLM and CoreShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam and CoreShares TotalWldStock ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreShares TotalWldStock and SLM Corp 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 Sanlam 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 SLM Corp i.e., SLM Corp and CoreShares TotalWldStock go up and down completely randomly.

Pair Corralation between SLM Corp and CoreShares TotalWldStock

Assuming the 90 days trading horizon Sanlam is expected to under-perform the CoreShares TotalWldStock. In addition to that, SLM Corp is 1.89 times more volatile than CoreShares TotalWldStock ETF. It trades about -0.05 of its total potential returns per unit of risk. CoreShares TotalWldStock ETF is currently generating about 0.0 per unit of volatility. If you would invest  159,400  in CoreShares TotalWldStock ETF on December 2, 2024 and sell it today you would lose (200.00) from holding CoreShares TotalWldStock ETF or give up 0.13% of portfolio value over 90 days.

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

Sanlam  vs.  CoreShares TotalWldStock ETF

SLM Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanlam has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, SLM Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CoreShares TotalWldStock

Risk-Adjusted Performance

Very Weak

Over the last 90 days CoreShares TotalWldStock ETF has generated negative risk-adjusted returns adding no value to investors with long positions. 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 SLM Corp and CoreShares TotalWldStock

The main advantage of trading using opposite SLM Corp and CoreShares TotalWldStock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp 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 Sanlam 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.