Correlation Between Betashares Asia and BetaShares Australia
Can any of the company-specific risk be diversified away by investing in both Betashares Asia 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 Betashares Asia and BetaShares Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Betashares Asia Technology and BetaShares Australia 200, you can compare the effects of market volatilities on Betashares Asia 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 Betashares Asia with a short position of BetaShares Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Betashares Asia and BetaShares Australia.
Diversification Opportunities for Betashares Asia and BetaShares Australia
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Betashares and BetaShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Betashares Asia Technology 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 Betashares Asia 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 Asia Technology 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 Betashares Asia i.e., Betashares Asia and BetaShares Australia go up and down completely randomly.
Pair Corralation between Betashares Asia and BetaShares Australia
Assuming the 90 days trading horizon Betashares Asia Technology is expected to generate 1.8 times more return on investment than BetaShares Australia. However, Betashares Asia is 1.8 times more volatile than BetaShares Australia 200. It trades about 0.08 of its potential returns per unit of risk. BetaShares Australia 200 is currently generating about 0.12 per unit of risk. If you would invest 733.00 in Betashares Asia Technology on August 29, 2024 and sell it today you would earn a total of 223.00 from holding Betashares Asia Technology or generate 30.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Betashares Asia Technology vs. BetaShares Australia 200
Performance |
| Timeline |
| Betashares Asia Tech |
| BetaShares Australia 200 |
Betashares Asia and BetaShares Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Betashares Asia and BetaShares Australia
The main advantage of trading using opposite Betashares Asia and BetaShares Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Betashares Asia 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.| Betashares Asia vs. CD Private Equity | Betashares Asia vs. BetaShares Australia 200 | Betashares Asia vs. Australian High Interest | Betashares Asia vs. Airlie Australian Share |
| 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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