Correlation Between BetaPro Canadian and Desjardins Alt
Can any of the company-specific risk be diversified away by investing in both BetaPro Canadian and Desjardins Alt 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 Canadian and Desjardins Alt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro Canadian Gold and Desjardins Alt LongShort, you can compare the effects of market volatilities on BetaPro Canadian and Desjardins Alt 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 Canadian with a short position of Desjardins Alt. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Canadian and Desjardins Alt.
Diversification Opportunities for BetaPro Canadian and Desjardins Alt
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BetaPro and Desjardins is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Canadian Gold and Desjardins Alt LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins Alt LongShort and BetaPro Canadian 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 Canadian Gold are associated (or correlated) with Desjardins Alt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins Alt LongShort has no effect on the direction of BetaPro Canadian i.e., BetaPro Canadian and Desjardins Alt go up and down completely randomly.
Pair Corralation between BetaPro Canadian and Desjardins Alt
Assuming the 90 days trading horizon BetaPro Canadian Gold is expected to generate 45.28 times more return on investment than Desjardins Alt. However, BetaPro Canadian is 45.28 times more volatile than Desjardins Alt LongShort. It trades about 0.23 of its potential returns per unit of risk. Desjardins Alt LongShort is currently generating about -0.11 per unit of risk. If you would invest 2,449 in BetaPro Canadian Gold on November 28, 2024 and sell it today you would earn a total of 442.00 from holding BetaPro Canadian Gold or generate 18.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro Canadian Gold vs. Desjardins Alt LongShort
Performance |
| Timeline |
| BetaPro Canadian Gold |
| Desjardins Alt LongShort |
BetaPro Canadian and Desjardins Alt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Canadian and Desjardins Alt
The main advantage of trading using opposite BetaPro Canadian and Desjardins Alt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Canadian position performs unexpectedly, Desjardins Alt 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 Desjardins Alt will offset losses from the drop in Desjardins Alt's long position.| BetaPro Canadian vs. BetaPro SPTSX 60 | BetaPro Canadian vs. BetaPro Equal Weight | BetaPro Canadian vs. BetaPro Gold Bullion | BetaPro Canadian vs. BetaPro SP 500 |
| Desjardins Alt vs. Desjardins American Equity | Desjardins Alt vs. Desjardins RI Canada | Desjardins Alt vs. Desjardins RI Canada | Desjardins Alt vs. Desjardins Canadian 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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