Correlation Between Australian High and BetaShares Australia
Can any of the company-specific risk be diversified away by investing in both Australian High and BetaShares Australia 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 Australian High and BetaShares Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian High Interest and BetaShares Australia 200, you can compare the effects of market volatilities on Australian High and BetaShares Australia 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 Australian High with a short position of BetaShares Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian High and BetaShares Australia.
Diversification Opportunities for Australian High and BetaShares Australia
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Australian and BetaShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and BetaShares Australia 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Australia 200 and Australian High 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 Australian High Interest are associated (or correlated) with BetaShares Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Australia 200 has no effect on the direction of Australian High i.e., Australian High and BetaShares Australia go up and down completely randomly.
Pair Corralation between Australian High and BetaShares Australia
Assuming the 90 days trading horizon Australian High is expected to generate 3.33 times less return on investment than BetaShares Australia. But when comparing it to its historical volatility, Australian High Interest is 38.48 times less risky than BetaShares Australia. It trades about 0.92 of its potential returns per unit of risk. BetaShares Australia 200 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11,337 in BetaShares Australia 200 on August 26, 2024 and sell it today you would earn a total of 2,731 from holding BetaShares Australia 200 or generate 24.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian High Interest vs. BetaShares Australia 200
Performance |
| Timeline |
| Australian High Interest |
| BetaShares Australia 200 |
Australian High and BetaShares Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian High and BetaShares Australia
The main advantage of trading using opposite Australian High and BetaShares Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian High position performs unexpectedly, BetaShares Australia 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 Australia will offset losses from the drop in BetaShares Australia's long position.| Australian High vs. Betashares Asia Technology | Australian High vs. CD Private Equity | Australian High vs. BetaShares Australia 200 | Australian High vs. Airlie Australian Share |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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