Correlation Between NewFunds Low and Coronation Capital

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

By analyzing existing cross correlation between NewFunds Low Volatility and Coronation Capital Plus, you can compare the effects of market volatilities on NewFunds Low and Coronation Capital 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 NewFunds Low with a short position of Coronation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFunds Low and Coronation Capital.

Diversification Opportunities for NewFunds Low and Coronation Capital

0.46

Correlation Coefficient

NewFunds Low  Coronation Capital

Very weak diversification

The 3 months correlation between NewFunds and Coronation is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NewFunds Low Volatility and Coronation Capital Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Capital Plus and NewFunds Low 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 NewFunds Low Volatility are associated (or correlated) with Coronation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Capital Plus has no effect on the direction of NewFunds Low i.e., NewFunds Low and Coronation Capital go up and down completely randomly.

Pair Corralation between NewFunds Low and Coronation Capital

Assuming the 90 days trading horizon NewFunds Low is expected to generate 1.37 times less return on investment than Coronation Capital. In addition to that, NewFunds Low is 1.4 times more volatile than Coronation Capital Plus. It trades about 0.12 of its total potential returns per unit of risk. Coronation Capital Plus is currently generating about 0.24 per unit of volatility. If you would invest  5,405  in Coronation Capital Plus on September 12, 2024 and sell it today you would earn a total of  352.00  from holding Coronation Capital Plus or generate 6.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

NewFunds Low Volatility  vs.  Coronation Capital Plus

NewFunds Low Volatility

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NewFunds Low Volatility are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, NewFunds Low is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Coronation Capital Plus

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Capital Plus are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly weak basic indicators, Coronation Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NewFunds Low and Coronation Capital

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

The idea behind NewFunds Low Volatility and Coronation Capital Plus 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.