Correlation Between BetaShares Geared and IShares UBS
Can any of the company-specific risk be diversified away by investing in both BetaShares Geared and IShares UBS 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 IShares UBS 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 iShares UBS Government, you can compare the effects of market volatilities on BetaShares Geared and IShares UBS 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 IShares UBS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and IShares UBS.
Diversification Opportunities for BetaShares Geared and IShares UBS
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BetaShares and IShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Australian and iShares UBS Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares UBS Government 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 IShares UBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares UBS Government has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and IShares UBS go up and down completely randomly.
Pair Corralation between BetaShares Geared and IShares UBS
Assuming the 90 days trading horizon BetaShares Geared Australian is expected to generate 4.71 times more return on investment than IShares UBS. However, BetaShares Geared is 4.71 times more volatile than iShares UBS Government. It trades about 0.13 of its potential returns per unit of risk. iShares UBS Government is currently generating about 0.14 per unit of risk. If you would invest 3,178 in BetaShares Geared Australian on August 29, 2024 and sell it today you would earn a total of 128.00 from holding BetaShares Geared Australian or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Geared Australian vs. iShares UBS Government
Performance |
| Timeline |
| BetaShares Geared |
| iShares UBS Government |
BetaShares Geared and IShares UBS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Geared and IShares UBS
The main advantage of trading using opposite BetaShares Geared and IShares UBS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Geared position performs unexpectedly, IShares UBS 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 IShares UBS will offset losses from the drop in IShares UBS's long position.The idea behind BetaShares Geared Australian and iShares UBS Government 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.
| IShares UBS vs. iShares MSCI Emerging | IShares UBS vs. iShares Global Aggregate | IShares UBS vs. iShares CoreSP MidCap | IShares UBS vs. iShares SP 500 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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