Correlation Between BetaShares Global and BetaShares Climate
Can any of the company-specific risk be diversified away by investing in both BetaShares Global and BetaShares Climate 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 Global and BetaShares Climate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Global Government and BetaShares Climate Change, you can compare the effects of market volatilities on BetaShares Global and BetaShares Climate 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 Global with a short position of BetaShares Climate. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Global and BetaShares Climate.
Diversification Opportunities for BetaShares Global and BetaShares Climate
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BetaShares and BetaShares is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Global Government and BetaShares Climate Change in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Climate Change and BetaShares Global 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 Global Government are associated (or correlated) with BetaShares Climate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Climate Change has no effect on the direction of BetaShares Global i.e., BetaShares Global and BetaShares Climate go up and down completely randomly.
Pair Corralation between BetaShares Global and BetaShares Climate
Assuming the 90 days trading horizon BetaShares Global Government is expected to generate 0.65 times more return on investment than BetaShares Climate. However, BetaShares Global Government is 1.55 times less risky than BetaShares Climate. It trades about 0.05 of its potential returns per unit of risk. BetaShares Climate Change is currently generating about -0.06 per unit of risk. If you would invest 1,374 in BetaShares Global Government on August 29, 2024 and sell it today you would earn a total of 11.00 from holding BetaShares Global Government or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Global Government vs. BetaShares Climate Change
Performance |
| Timeline |
| BetaShares Global |
| BetaShares Climate Change |
BetaShares Global and BetaShares Climate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Global and BetaShares Climate
The main advantage of trading using opposite BetaShares Global and BetaShares Climate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Global position performs unexpectedly, BetaShares Climate 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 Climate will offset losses from the drop in BetaShares Climate's long position.The idea behind BetaShares Global Government and BetaShares Climate Change 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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