Correlation Between BetaShares Australia and SPDR SPASX
Can any of the company-specific risk be diversified away by investing in both BetaShares Australia and SPDR SPASX 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 SPDR SPASX 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 SPDR SPASX 200, you can compare the effects of market volatilities on BetaShares Australia and SPDR SPASX 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 SPDR SPASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Australia and SPDR SPASX.
Diversification Opportunities for BetaShares Australia and SPDR SPASX
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between BetaShares and SPDR is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Australia 200 and SPDR SPASX 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SPASX 200 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 SPDR SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SPASX 200 has no effect on the direction of BetaShares Australia i.e., BetaShares Australia and SPDR SPASX go up and down completely randomly.
Pair Corralation between BetaShares Australia and SPDR SPASX
Assuming the 90 days trading horizon BetaShares Australia 200 is expected to generate 0.98 times more return on investment than SPDR SPASX. However, BetaShares Australia 200 is 1.02 times less risky than SPDR SPASX. It trades about 0.32 of its potential returns per unit of risk. SPDR SPASX 200 is currently generating about 0.31 per unit of risk. If you would invest 13,620 in BetaShares Australia 200 on September 1, 2024 and sell it today you would earn a total of 519.00 from holding BetaShares Australia 200 or generate 3.81% 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. SPDR SPASX 200
Performance |
| Timeline |
| BetaShares Australia 200 |
| SPDR SPASX 200 |
BetaShares Australia and SPDR SPASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Australia and SPDR SPASX
The main advantage of trading using opposite BetaShares Australia and SPDR SPASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Australia position performs unexpectedly, SPDR SPASX 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 SPDR SPASX will offset losses from the drop in SPDR SPASX's long position.The idea behind BetaShares Australia 200 and SPDR SPASX 200 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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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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