Correlation Between CoreShares and CoreShares Preference

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

By analyzing existing cross correlation between CoreShares SP 500 and CoreShares Preference Share, you can compare the effects of market volatilities on CoreShares and CoreShares Preference 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 with a short position of CoreShares Preference. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoreShares and CoreShares Preference.

Diversification Opportunities for CoreShares and CoreShares Preference

0.0

Correlation Coefficient

CoreShares  CoreShares Preference

Pay attention - limited upside

The 3 months correlation between CoreShares and CoreShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CoreShares SP 500 and CoreShares Preference Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreShares Preference and CoreShares 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 SP 500 are associated (or correlated) with CoreShares Preference. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreShares Preference has no effect on the direction of CoreShares i.e., CoreShares and CoreShares Preference go up and down completely randomly.

Pair Corralation between CoreShares and CoreShares Preference

If you would invest  1,002,700  in CoreShares SP 500 on September 15, 2024 and sell it today you would earn a total of  90,200  from holding CoreShares SP 500 or generate 9.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

CoreShares SP 500  vs.  CoreShares Preference Share

CoreShares SP 500

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CoreShares SP 500 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CoreShares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CoreShares Preference

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with CoreShares and CoreShares Preference

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

The idea behind CoreShares SP 500 and CoreShares Preference Share 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.