Correlation Between Australian High and BetaShares Legg
Can any of the company-specific risk be diversified away by investing in both Australian High and BetaShares Legg 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 Legg 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 Legg Mason, you can compare the effects of market volatilities on Australian High and BetaShares Legg 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 Legg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian High and BetaShares Legg.
Diversification Opportunities for Australian High and BetaShares Legg
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and BetaShares is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and BetaShares Legg Mason in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Legg Mason 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 Legg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Legg Mason has no effect on the direction of Australian High i.e., Australian High and BetaShares Legg go up and down completely randomly.
Pair Corralation between Australian High and BetaShares Legg
Assuming the 90 days trading horizon Australian High is expected to generate 1223.45 times less return on investment than BetaShares Legg. But when comparing it to its historical volatility, Australian High Interest is 6758.05 times less risky than BetaShares Legg. It trades about 0.83 of its potential returns per unit of risk. BetaShares Legg Mason is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 903.00 in BetaShares Legg Mason on September 13, 2024 and sell it today you would earn a total of 7,826 from holding BetaShares Legg Mason or generate 866.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Australian High Interest vs. BetaShares Legg Mason
Performance |
| Timeline |
| Australian High Interest |
| BetaShares Legg Mason |
Australian High and BetaShares Legg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian High and BetaShares Legg
The main advantage of trading using opposite Australian High and BetaShares Legg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian High position performs unexpectedly, BetaShares Legg 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 Legg will offset losses from the drop in BetaShares Legg's long position.| Australian High vs. iShares Core SP | Australian High vs. iShares CoreSP MidCap | Australian High vs. iShares Core SP | Australian High vs. Vanguard Total Market |
| BetaShares Legg vs. Betashares Asia Technology | BetaShares Legg vs. BetaShares Australia 200 | BetaShares Legg vs. Australian High Interest | BetaShares Legg vs. Vanguard Global Infrastructure |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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