Correlation Between BetaShares Australian and Global X
Can any of the company-specific risk be diversified away by investing in both BetaShares Australian and Global X 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 Australian and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Australian Government and Global X Bloomberg, you can compare the effects of market volatilities on BetaShares Australian and Global X 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 Australian with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Australian and Global X.
Diversification Opportunities for BetaShares Australian and Global X
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaShares and Global is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Australian Governme and Global X Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Bloomberg and BetaShares Australian 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 Australian Government are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Bloomberg has no effect on the direction of BetaShares Australian i.e., BetaShares Australian and Global X go up and down completely randomly.
Pair Corralation between BetaShares Australian and Global X
Assuming the 90 days trading horizon BetaShares Australian is expected to generate 8.4 times less return on investment than Global X. But when comparing it to its historical volatility, BetaShares Australian Government is 1.7 times less risky than Global X. It trades about 0.01 of its potential returns per unit of risk. Global X Bloomberg is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 940.00 in Global X Bloomberg on August 30, 2024 and sell it today you would earn a total of 108.00 from holding Global X Bloomberg or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 72.29% |
| Values | Daily Returns |
BetaShares Australian Governme vs. Global X Bloomberg
Performance |
| Timeline |
| BetaShares Australian |
| Global X Bloomberg |
BetaShares Australian and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Australian and Global X
The main advantage of trading using opposite BetaShares Australian and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Australian position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind BetaShares Australian Government and Global X Bloomberg 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.
| Global X vs. BetaShares Geared Australian | Global X vs. BetaShares Global Robotics | Global X vs. iShares China LargeCap | Global X vs. Russell Australian Government |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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