Correlation Between BetaPro SPTSX and IShares Convertible
Can any of the company-specific risk be diversified away by investing in both BetaPro SPTSX and IShares Convertible 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 SPTSX and IShares Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SPTSX Capped and iShares Convertible Bond, you can compare the effects of market volatilities on BetaPro SPTSX and IShares Convertible 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 SPTSX with a short position of IShares Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and IShares Convertible.
Diversification Opportunities for BetaPro SPTSX and IShares Convertible
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BetaPro and IShares is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX Capped and iShares Convertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Convertible Bond and BetaPro SPTSX 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 SPTSX Capped are associated (or correlated) with IShares Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Convertible Bond has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and IShares Convertible go up and down completely randomly.
Pair Corralation between BetaPro SPTSX and IShares Convertible
Assuming the 90 days trading horizon BetaPro SPTSX Capped is expected to under-perform the IShares Convertible. In addition to that, BetaPro SPTSX is 4.18 times more volatile than iShares Convertible Bond. It trades about -0.02 of its total potential returns per unit of risk. iShares Convertible Bond is currently generating about 0.05 per unit of volatility. If you would invest 1,478 in iShares Convertible Bond on August 26, 2024 and sell it today you would earn a total of 255.00 from holding iShares Convertible Bond or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SPTSX Capped vs. iShares Convertible Bond
Performance |
| Timeline |
| BetaPro SPTSX Capped |
| iShares Convertible Bond |
BetaPro SPTSX and IShares Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SPTSX and IShares Convertible
The main advantage of trading using opposite BetaPro SPTSX and IShares Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SPTSX position performs unexpectedly, IShares Convertible 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 Convertible will offset losses from the drop in IShares Convertible's long position.| BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SPTSX Capped | BetaPro SPTSX vs. BetaPro SPTSX 60 |
| IShares Convertible vs. BMO Mid Federal | IShares Convertible vs. BMO Short Corporate | IShares Convertible vs. BMO Emerging Markets | IShares Convertible vs. BMO Long Corporate |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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