Correlation Between BetaPro Canadian and BetaPro SP
Can any of the company-specific risk be diversified away by investing in both BetaPro Canadian 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 Canadian 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 Canadian Gold and BetaPro SP 500, you can compare the effects of market volatilities on BetaPro Canadian 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 Canadian with a short position of BetaPro SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Canadian and BetaPro SP.
Diversification Opportunities for BetaPro Canadian and BetaPro SP
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BetaPro and BetaPro is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Canadian Gold and BetaPro SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SP 500 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 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 500 has no effect on the direction of BetaPro Canadian i.e., BetaPro Canadian and BetaPro SP go up and down completely randomly.
Pair Corralation between BetaPro Canadian and BetaPro SP
Assuming the 90 days trading horizon BetaPro Canadian Gold is expected to under-perform the BetaPro SP. In addition to that, BetaPro Canadian is 2.6 times more volatile than BetaPro SP 500. It trades about -0.12 of its total potential returns per unit of risk. BetaPro SP 500 is currently generating about 0.17 per unit of volatility. If you would invest 2,542 in BetaPro SP 500 on August 29, 2024 and sell it today you would earn a total of 158.00 from holding BetaPro SP 500 or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro Canadian Gold vs. BetaPro SP 500
Performance |
| Timeline |
| BetaPro Canadian Gold |
| BetaPro SP 500 |
BetaPro Canadian and BetaPro SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Canadian and BetaPro SP
The main advantage of trading using opposite BetaPro Canadian and BetaPro SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Canadian 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.The idea behind BetaPro Canadian Gold and BetaPro SP 500 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.| BetaPro SP vs. BetaPro NASDAQ 100 2x | BetaPro SP vs. BetaPro SP 500 | BetaPro SP vs. BetaPro SP TSX | BetaPro SP vs. BetaPro NASDAQ 100 2x |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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