Correlation Between Story and Core

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

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

Diversification Opportunities for Story and Core

0.7

Correlation Coefficient

Story  Core

Poor diversification

The 3 months correlation between Story and Core is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Story and Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core and Story 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 Story are associated (or correlated) with Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core has no effect on the direction of Story i.e., Story and Core go up and down completely randomly.

Pair Corralation between Story and Core

Assuming the 90 days horizon Story is expected to generate 1.45 times more return on investment than Core. However, Story is 1.45 times more volatile than Core. It trades about 0.1 of its potential returns per unit of risk. Core is currently generating about -0.05 per unit of risk. If you would invest  356.00  in Story on April 21, 2025 and sell it today you would earn a total of  116.00  from holding Story or generate 32.58% return on investment over 90 days.

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

Story  vs.  Core

Story

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Story are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Story exhibited solid returns over the last few months and may actually be approaching a breakup point.

Core

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for Core shareholders.

Pair Trading with Story and Core

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

The idea behind Story and Core 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.