Correlation Between Satrix 40 and CoreShares TotalWldStock

Can any of the company-specific risk be diversified away by investing in both Satrix 40 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 Satrix 40 and CoreShares TotalWldStock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Satrix 40 ETF and CoreShares TotalWldStock ETF, you can compare the effects of market volatilities on Satrix 40 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 Satrix 40 with a short position of CoreShares TotalWldStock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Satrix 40 and CoreShares TotalWldStock.

Diversification Opportunities for Satrix 40 and CoreShares TotalWldStock

-0.22

Correlation Coefficient

Satrix 40  CoreShares TotalWldStock

Very good diversification

The 3 months correlation between Satrix and CoreShares is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Satrix 40 ETF and CoreShares TotalWldStock ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreShares TotalWldStock and Satrix 40 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 Satrix 40 ETF 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 Satrix 40 i.e., Satrix 40 and CoreShares TotalWldStock go up and down completely randomly.

Pair Corralation between Satrix 40 and CoreShares TotalWldStock

Assuming the 90 days trading horizon Satrix 40 is expected to generate 2.26 times less return on investment than CoreShares TotalWldStock. In addition to that, Satrix 40 is 1.02 times more volatile than CoreShares TotalWldStock ETF. It trades about 0.04 of its total potential returns per unit of risk. CoreShares TotalWldStock ETF is currently generating about 0.09 per unit of volatility. If you would invest  106,498  in CoreShares TotalWldStock ETF on September 24, 2024 and sell it today you would earn a total of  48,302  from holding CoreShares TotalWldStock ETF or generate 45.35% return on investment over 90 days.

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

Satrix 40 ETF  vs.  CoreShares TotalWldStock ETF

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.

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.

Pair Trading with Satrix 40 and CoreShares TotalWldStock

The main advantage of trading using opposite Satrix 40 and CoreShares TotalWldStock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Satrix 40 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 Satrix 40 ETF 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.