Correlation Between BetaShares Global and ETFS FANG
Can any of the company-specific risk be diversified away by investing in both BetaShares Global 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 Global 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 Global Government and ETFS FANG ETF, you can compare the effects of market volatilities on BetaShares Global 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 Global with a short position of ETFS FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Global and ETFS FANG.
Diversification Opportunities for BetaShares Global and ETFS FANG
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BetaShares and ETFS is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Global Government 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 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 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 Global i.e., BetaShares Global and ETFS FANG go up and down completely randomly.
Pair Corralation between BetaShares Global and ETFS FANG
Assuming the 90 days trading horizon BetaShares Global Government is expected to under-perform the ETFS FANG. But the etf apears to be less risky and, when comparing its historical volatility, BetaShares Global Government is 1.58 times less risky than ETFS FANG. The etf trades about -0.03 of its potential returns per unit of risk. The ETFS FANG ETF is currently generating about 0.14 of returns per unit of risk over similar time horizon. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Global Government vs. ETFS FANG ETF
Performance |
| Timeline |
| BetaShares Global |
| ETFS FANG ETF |
BetaShares Global and ETFS FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Global and ETFS FANG
The main advantage of trading using opposite BetaShares Global and ETFS FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Global 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 Global Government 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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