Correlation Between BetaPro Canadian and BetaPro Gold
Can any of the company-specific risk be diversified away by investing in both BetaPro Canadian and BetaPro Gold 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 BetaPro Gold 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 BetaPro Gold Bullion, you can compare the effects of market volatilities on BetaPro Canadian and BetaPro Gold 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 BetaPro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Canadian and BetaPro Gold.
Diversification Opportunities for BetaPro Canadian and BetaPro Gold
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BetaPro and BetaPro is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Canadian Gold and BetaPro Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Gold Bullion 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 BetaPro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Gold Bullion has no effect on the direction of BetaPro Canadian i.e., BetaPro Canadian and BetaPro Gold go up and down completely randomly.
Pair Corralation between BetaPro Canadian and BetaPro Gold
Assuming the 90 days trading horizon BetaPro Canadian Gold is expected to under-perform the BetaPro Gold. In addition to that, BetaPro Canadian is 1.69 times more volatile than BetaPro Gold Bullion. It trades about -0.12 of its total potential returns per unit of risk. BetaPro Gold Bullion is currently generating about -0.15 per unit of volatility. If you would invest 1,877 in BetaPro Gold Bullion on August 29, 2024 and sell it today you would lose (172.00) from holding BetaPro Gold Bullion or give up 9.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro Canadian Gold vs. BetaPro Gold Bullion
Performance |
| Timeline |
| BetaPro Canadian Gold |
| BetaPro Gold Bullion |
BetaPro Canadian and BetaPro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Canadian and BetaPro Gold
The main advantage of trading using opposite BetaPro Canadian and BetaPro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Canadian position performs unexpectedly, BetaPro Gold 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 Gold will offset losses from the drop in BetaPro Gold's long position.The idea behind BetaPro Canadian Gold and BetaPro Gold Bullion 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.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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