Correlation Between BetaShares Geared and Betashares Australian
Can any of the company-specific risk be diversified away by investing in both BetaShares Geared and Betashares Australian 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 Betashares Australian 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 Betashares Australian Cash, you can compare the effects of market volatilities on BetaShares Geared and Betashares Australian 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 Betashares Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and Betashares Australian.
Diversification Opportunities for BetaShares Geared and Betashares Australian
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BetaShares and Betashares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Australian and Betashares Australian Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Australian 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 Betashares Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Australian has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and Betashares Australian go up and down completely randomly.
Pair Corralation between BetaShares Geared and Betashares Australian
Assuming the 90 days trading horizon BetaShares Geared Australian is expected to generate 71.47 times more return on investment than Betashares Australian. However, BetaShares Geared is 71.47 times more volatile than Betashares Australian Cash. It trades about 0.33 of its potential returns per unit of risk. Betashares Australian Cash is currently generating about 0.76 per unit of risk. If you would invest 3,075 in BetaShares Geared Australian on September 2, 2024 and sell it today you would earn a total of 293.00 from holding BetaShares Geared Australian or generate 9.53% 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. Betashares Australian Cash
Performance |
| Timeline |
| BetaShares Geared |
| Betashares Australian |
BetaShares Geared and Betashares Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Geared and Betashares Australian
The main advantage of trading using opposite BetaShares Geared and Betashares Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Geared position performs unexpectedly, Betashares Australian 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 Australian will offset losses from the drop in Betashares Australian's long position.The idea behind BetaShares Geared Australian and Betashares Australian Cash 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.
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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