Correlation Between BetaShares Geared and ETFS FANG
Can any of the company-specific risk be diversified away by investing in both BetaShares Geared and ETFS FANG 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 ETFS FANG 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 ETFS FANG ETF, you can compare the effects of market volatilities on BetaShares Geared and ETFS FANG 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 ETFS FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and ETFS FANG.
Diversification Opportunities for BetaShares Geared and ETFS FANG
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between BetaShares and ETFS is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Australian and ETFS FANG ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS FANG ETF 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 ETFS FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS FANG ETF has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and ETFS FANG go up and down completely randomly.
Pair Corralation between BetaShares Geared and ETFS FANG
Assuming the 90 days trading horizon BetaShares Geared is expected to generate 2.74 times less return on investment than ETFS FANG. In addition to that, BetaShares Geared is 1.09 times more volatile than ETFS FANG ETF. It trades about 0.05 of its total potential returns per unit of risk. ETFS FANG ETF is currently generating about 0.14 per unit of volatility. If you would invest 1,256 in ETFS FANG ETF on November 5, 2024 and sell it today you would earn a total of 2,114 from holding ETFS FANG ETF or generate 168.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Geared Australian vs. ETFS FANG ETF
Performance |
| Timeline |
| BetaShares Geared |
| ETFS FANG ETF |
BetaShares Geared and ETFS FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Geared and ETFS FANG
The main advantage of trading using opposite BetaShares Geared and ETFS FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Geared position performs unexpectedly, ETFS FANG 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 ETFS FANG will offset losses from the drop in ETFS FANG's long position.The idea behind BetaShares Geared Australian and ETFS FANG ETF 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.
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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