Correlation Between BetaPro Gold and BetaPro SP
Can any of the company-specific risk be diversified away by investing in both BetaPro Gold 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 BetaPro Gold and BetaPro SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro Gold Bullion and BetaPro SP TSX, you can compare the effects of market volatilities on BetaPro Gold 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 BetaPro Gold with a short position of BetaPro SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Gold and BetaPro SP.
Diversification Opportunities for BetaPro Gold and BetaPro SP
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BetaPro and BetaPro is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Gold Bullion 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 BetaPro Gold 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 BetaPro Gold Bullion 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 BetaPro Gold i.e., BetaPro Gold and BetaPro SP go up and down completely randomly.
Pair Corralation between BetaPro Gold and BetaPro SP
Assuming the 90 days trading horizon BetaPro Gold Bullion is expected to generate 6.88 times more return on investment than BetaPro SP. However, BetaPro Gold is 6.88 times more volatile than BetaPro SP TSX. It trades about 0.05 of its potential returns per unit of risk. BetaPro SP TSX is currently generating about 0.05 per unit of risk. If you would invest 1,090 in BetaPro Gold Bullion on September 4, 2024 and sell it today you would earn a total of 1,532 from holding BetaPro Gold Bullion or generate 140.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro Gold Bullion vs. BetaPro SP TSX
Performance |
| Timeline |
| BetaPro Gold Bullion |
| BetaPro SP TSX |
BetaPro Gold and BetaPro SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Gold and BetaPro SP
The main advantage of trading using opposite BetaPro Gold and BetaPro SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Gold 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.| BetaPro Gold vs. BetaPro SP TSX | BetaPro Gold vs. BetaPro SPTSX Capped | BetaPro Gold vs. BetaPro SPTSX 60 |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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