Correlation Between BetaShares Geared and IShares SP
Can any of the company-specific risk be diversified away by investing in both BetaShares Geared and IShares SP 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 SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Geared Equity and iShares SP 500, you can compare the effects of market volatilities on BetaShares Geared and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and IShares SP.
Diversification Opportunities for BetaShares Geared and IShares SP
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between BetaShares and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Equity and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 Equity are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and IShares SP go up and down completely randomly.
Pair Corralation between BetaShares Geared and IShares SP
Assuming the 90 days trading horizon BetaShares Geared Equity is expected to generate 2.35 times more return on investment than IShares SP. However, BetaShares Geared is 2.35 times more volatile than iShares SP 500. It trades about 0.1 of its potential returns per unit of risk. iShares SP 500 is currently generating about 0.11 per unit of risk. If you would invest 2,172 in BetaShares Geared Equity on September 3, 2024 and sell it today you would earn a total of 2,479 from holding BetaShares Geared Equity or generate 114.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Geared Equity vs. iShares SP 500
Performance |
| Timeline |
| BetaShares Geared Equity |
| iShares SP 500 |
BetaShares Geared and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Geared and IShares SP
The main advantage of trading using opposite BetaShares Geared and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Geared position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.The idea behind BetaShares Geared Equity and iShares SP 500 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 SP vs. iShares MSCI Emerging | IShares SP vs. iShares Global Aggregate | IShares SP vs. iShares CoreSP MidCap | IShares SP vs. iShares Core MSCI |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |