Correlation Between BetaPro SP and BetaPro Crude
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and BetaPro Crude 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 BetaPro Crude into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SP 500 and BetaPro Crude Oil, you can compare the effects of market volatilities on BetaPro SP and BetaPro Crude 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 BetaPro Crude. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and BetaPro Crude.
Diversification Opportunities for BetaPro SP and BetaPro Crude
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BetaPro and BetaPro is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and BetaPro Crude Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Crude Oil 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 500 are associated (or correlated) with BetaPro Crude. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Crude Oil has no effect on the direction of BetaPro SP i.e., BetaPro SP and BetaPro Crude go up and down completely randomly.
Pair Corralation between BetaPro SP and BetaPro Crude
Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the BetaPro Crude. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro SP 500 is 4.18 times less risky than BetaPro Crude. The etf trades about -0.3 of its potential returns per unit of risk. The BetaPro Crude Oil is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,195 in BetaPro Crude Oil on September 1, 2024 and sell it today you would lose (66.00) from holding BetaPro Crude Oil or give up 5.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SP 500 vs. BetaPro Crude Oil
Performance |
| Timeline |
| BetaPro SP 500 |
| BetaPro Crude Oil |
BetaPro SP and BetaPro Crude Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and BetaPro Crude
The main advantage of trading using opposite BetaPro SP and BetaPro Crude positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, BetaPro Crude 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 Crude will offset losses from the drop in BetaPro Crude's long position.| BetaPro SP vs. BetaPro SPTSX 60 | BetaPro SP vs. BetaPro NASDAQ 100 2x | BetaPro SP vs. BetaPro SP 500 | BetaPro SP vs. BetaPro Gold Bullion |
| BetaPro Crude vs. BetaPro Gold Bullion | BetaPro Crude vs. BetaPro NASDAQ 100 2x | BetaPro Crude vs. BetaPro SP TSX | BetaPro Crude vs. BetaPro SP TSX |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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