Correlation Between Coreshares Index and Absa Smart

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

By analyzing existing cross correlation between Coreshares Index Tracker and Absa Smart Alpha, you can compare the effects of market volatilities on Coreshares Index and Absa Smart 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 Index with a short position of Absa Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coreshares Index and Absa Smart.

Diversification Opportunities for Coreshares Index and Absa Smart

0.0

Correlation Coefficient

Coreshares Index  Absa Smart

Pay attention - limited upside

The 3 months correlation between Coreshares and Absa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coreshares Index Tracker and Absa Smart Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Smart Alpha and Coreshares Index 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 Index Tracker are associated (or correlated) with Absa Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Smart Alpha has no effect on the direction of Coreshares Index i.e., Coreshares Index and Absa Smart go up and down completely randomly.

Pair Corralation between Coreshares Index and Absa Smart

If you would invest  105,500  in Coreshares Index Tracker on September 15, 2024 and sell it today you would earn a total of  4,300  from holding Coreshares Index Tracker or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Coreshares Index Tracker  vs.  Absa Smart Alpha

Coreshares Index Tracker

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coreshares Index Tracker are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Coreshares Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Absa Smart Alpha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absa Smart Alpha has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Absa Smart 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 Index and Absa Smart

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

The idea behind Coreshares Index Tracker and Absa Smart Alpha 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.