Correlation Between GSETNC and Coreshares Index

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

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

Diversification Opportunities for GSETNC and Coreshares Index

0.19

Correlation Coefficient

GSETNC  Coreshares Index

Average diversification

The 3 months correlation between GSETNC and Coreshares is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding GSETNC and Coreshares Index Tracker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coreshares Index Tracker and GSETNC 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 GSETNC are associated (or correlated) with Coreshares Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coreshares Index Tracker has no effect on the direction of GSETNC i.e., GSETNC and Coreshares Index go up and down completely randomly.

Pair Corralation between GSETNC and Coreshares Index

Assuming the 90 days trading horizon GSETNC is expected to generate 3.28 times more return on investment than Coreshares Index. However, GSETNC is 3.28 times more volatile than Coreshares Index Tracker. It trades about 0.21 of its potential returns per unit of risk. Coreshares Index Tracker is currently generating about 0.01 per unit of risk. If you would invest  301,100  in GSETNC on September 1, 2024 and sell it today you would earn a total of  65,500  from holding GSETNC or generate 21.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

GSETNC  vs.  Coreshares Index Tracker

GSETNC

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GSETNC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, GSETNC sustained solid returns over the last few months and may actually be approaching a breakup point.

Coreshares Index Tracker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coreshares Index Tracker has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with GSETNC and Coreshares Index

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

The idea behind GSETNC and Coreshares Index Tracker 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.