Correlation Between Global X and BetaPro SP
Can any of the company-specific risk be diversified away by investing in both Global X and BetaPro 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 Global X and BetaPro SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and BetaPro SP TSX, you can compare the effects of market volatilities on Global X and BetaPro 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 Global X with a short position of BetaPro SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and BetaPro SP.
Diversification Opportunities for Global X and BetaPro SP
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and BetaPro is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and BetaPro SP TSX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SP TSX and Global X 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 Global X Active are associated (or correlated) with BetaPro SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SP TSX has no effect on the direction of Global X i.e., Global X and BetaPro SP go up and down completely randomly.
Pair Corralation between Global X and BetaPro SP
Assuming the 90 days trading horizon Global X Active is expected to generate 0.27 times more return on investment than BetaPro SP. However, Global X Active is 3.69 times less risky than BetaPro SP. It trades about 0.02 of its potential returns per unit of risk. BetaPro SP TSX is currently generating about -0.3 per unit of risk. If you would invest 720.00 in Global X Active on August 25, 2024 and sell it today you would earn a total of 1.00 from holding Global X Active or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Active vs. BetaPro SP TSX
Performance |
| Timeline |
| Global X Active |
| BetaPro SP TSX |
Global X and BetaPro SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and BetaPro SP
The main advantage of trading using opposite Global X and BetaPro SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, BetaPro 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 BetaPro SP will offset losses from the drop in BetaPro SP's long position.The idea behind Global X Active and BetaPro SP TSX 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.| BetaPro SP vs. BetaPro NASDAQ 100 2x | BetaPro SP vs. BetaPro Canadian Gold | BetaPro SP vs. BetaPro Crude Oil | BetaPro SP vs. BetaPro Natural Gas |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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