Correlation Between BetaShares Australia and BetaShares Geared
Can any of the company-specific risk be diversified away by investing in both BetaShares Australia and BetaShares Geared 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 BetaShares Australia and BetaShares Geared into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Australia 200 and BetaShares Geared Australian, you can compare the effects of market volatilities on BetaShares Australia and BetaShares Geared 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 BetaShares Australia with a short position of BetaShares Geared. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Australia and BetaShares Geared.
Diversification Opportunities for BetaShares Australia and BetaShares Geared
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between BetaShares and BetaShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Australia 200 and BetaShares Geared Australian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Geared and BetaShares Australia 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 BetaShares Australia 200 are associated (or correlated) with BetaShares Geared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Geared has no effect on the direction of BetaShares Australia i.e., BetaShares Australia and BetaShares Geared go up and down completely randomly.
Pair Corralation between BetaShares Australia and BetaShares Geared
Assuming the 90 days trading horizon BetaShares Australia is expected to generate 2.2 times less return on investment than BetaShares Geared. But when comparing it to its historical volatility, BetaShares Australia 200 is 2.48 times less risky than BetaShares Geared. It trades about 0.15 of its potential returns per unit of risk. BetaShares Geared Australian is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,178 in BetaShares Geared Australian on August 29, 2024 and sell it today you would earn a total of 128.00 from holding BetaShares Geared Australian or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Australia 200 vs. BetaShares Geared Australian
Performance |
| Timeline |
| BetaShares Australia 200 |
| BetaShares Geared |
BetaShares Australia and BetaShares Geared Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Australia and BetaShares Geared
The main advantage of trading using opposite BetaShares Australia and BetaShares Geared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Australia position performs unexpectedly, BetaShares Geared 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 BetaShares Geared will offset losses from the drop in BetaShares Geared's long position.| BetaShares Australia vs. SPDR SP 500 | BetaShares Australia vs. Vanguard Total Market | BetaShares Australia vs. iShares Core SP | BetaShares Australia vs. iShares Core SP |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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