Correlation Between BetaShares Geared and Global X
Can any of the company-specific risk be diversified away by investing in both BetaShares Geared 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 Geared 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 Geared Australian and Global X 21Shares, you can compare the effects of market volatilities on BetaShares Geared 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 Geared with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and Global X.
Diversification Opportunities for BetaShares Geared and Global X
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BetaShares and Global is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Australian and Global X 21Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X 21Shares and BetaShares Geared 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 Geared Australian 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 21Shares has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and Global X go up and down completely randomly.
Pair Corralation between BetaShares Geared and Global X
Assuming the 90 days trading horizon BetaShares Geared is expected to generate 4.69 times less return on investment than Global X. But when comparing it to its historical volatility, BetaShares Geared Australian is 1.98 times less risky than Global X. It trades about 0.05 of its potential returns per unit of risk. Global X 21Shares is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 252.00 in Global X 21Shares on August 30, 2024 and sell it today you would earn a total of 1,136 from holding Global X 21Shares or generate 450.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Geared Australian vs. Global X 21Shares
Performance |
| Timeline |
| BetaShares Geared |
| Global X 21Shares |
BetaShares Geared and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Geared and Global X
The main advantage of trading using opposite BetaShares Geared and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Geared 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 Geared Australian and Global X 21Shares 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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