Correlation Between BetaShares Diversified and Betashares Asia
Can any of the company-specific risk be diversified away by investing in both BetaShares Diversified and Betashares Asia 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 Diversified and Betashares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Diversified High and Betashares Asia Technology, you can compare the effects of market volatilities on BetaShares Diversified and Betashares Asia 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 Diversified with a short position of Betashares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Diversified and Betashares Asia.
Diversification Opportunities for BetaShares Diversified and Betashares Asia
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BetaShares and Betashares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Diversified High and Betashares Asia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Asia Tech and BetaShares Diversified 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 Diversified High are associated (or correlated) with Betashares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Asia Tech has no effect on the direction of BetaShares Diversified i.e., BetaShares Diversified and Betashares Asia go up and down completely randomly.
Pair Corralation between BetaShares Diversified and Betashares Asia
Assuming the 90 days trading horizon BetaShares Diversified is expected to generate 1.08 times less return on investment than Betashares Asia. But when comparing it to its historical volatility, BetaShares Diversified High is 2.3 times less risky than Betashares Asia. It trades about 0.12 of its potential returns per unit of risk. Betashares Asia Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 694.00 in Betashares Asia Technology on September 4, 2024 and sell it today you would earn a total of 259.00 from holding Betashares Asia Technology or generate 37.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Diversified High vs. Betashares Asia Technology
Performance |
| Timeline |
| BetaShares Diversified |
| Betashares Asia Tech |
BetaShares Diversified and Betashares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Diversified and Betashares Asia
The main advantage of trading using opposite BetaShares Diversified and Betashares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Diversified position performs unexpectedly, Betashares Asia 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 Asia will offset losses from the drop in Betashares Asia's long position.| BetaShares Diversified vs. Betashares Asia Technology | BetaShares Diversified vs. CD Private Equity | BetaShares Diversified vs. BetaShares Australia 200 | BetaShares Diversified vs. Australian High Interest |
| Betashares Asia vs. CD Private Equity | Betashares Asia vs. BetaShares Australia 200 | Betashares Asia vs. Australian High Interest | Betashares Asia 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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