Correlation Between BetaPro SP and Vanguard Canadian
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and Vanguard Canadian 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 SP and Vanguard Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SP TSX and Vanguard Canadian Long Term, you can compare the effects of market volatilities on BetaPro SP and Vanguard Canadian 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 SP with a short position of Vanguard Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and Vanguard Canadian.
Diversification Opportunities for BetaPro SP and Vanguard Canadian
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BetaPro and Vanguard is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP TSX and Vanguard Canadian Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Canadian Long and BetaPro SP 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 SP TSX are associated (or correlated) with Vanguard Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Canadian Long has no effect on the direction of BetaPro SP i.e., BetaPro SP and Vanguard Canadian go up and down completely randomly.
Pair Corralation between BetaPro SP and Vanguard Canadian
Assuming the 90 days trading horizon BetaPro SP TSX is expected to generate 4.92 times more return on investment than Vanguard Canadian. However, BetaPro SP is 4.92 times more volatile than Vanguard Canadian Long Term. It trades about 0.11 of its potential returns per unit of risk. Vanguard Canadian Long Term is currently generating about -0.11 per unit of risk. If you would invest 2,760 in BetaPro SP TSX on August 25, 2024 and sell it today you would earn a total of 377.00 from holding BetaPro SP TSX or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SP TSX vs. Vanguard Canadian Long Term
Performance |
| Timeline |
| BetaPro SP TSX |
| Vanguard Canadian Long |
BetaPro SP and Vanguard Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and Vanguard Canadian
The main advantage of trading using opposite BetaPro SP and Vanguard Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, Vanguard Canadian 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 Vanguard Canadian will offset losses from the drop in Vanguard Canadian's long position.| BetaPro SP vs. BetaPro SPTSX Capped | BetaPro SP vs. BetaPro SPTSX Capped | BetaPro SP vs. BetaPro SP TSX | BetaPro SP vs. BetaPro SP TSX |
| Vanguard Canadian vs. Vanguard Canadian Government | Vanguard Canadian vs. Vanguard Canadian Corporate | Vanguard Canadian vs. Vanguard Canadian Short | Vanguard Canadian vs. Vanguard Canadian Short Term |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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