Correlation Between BetaPro SP and IShares SP

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Can any of the company-specific risk be diversified away by investing in both BetaPro SP and IShares 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 SP and IShares SP 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 iShares SP Global, you can compare the effects of market volatilities on BetaPro SP and IShares 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 SP with a short position of IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and IShares SP.

Diversification Opportunities for BetaPro SP and IShares SP

-0.87
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between BetaPro and IShares is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and iShares SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP Global 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 IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP Global has no effect on the direction of BetaPro SP i.e., BetaPro SP and IShares SP go up and down completely randomly.

Pair Corralation between BetaPro SP and IShares SP

Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the IShares SP. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro SP 500 is 1.36 times less risky than IShares SP. The etf trades about -0.03 of its potential returns per unit of risk. The iShares SP Global is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  5,875  in iShares SP Global on September 12, 2024 and sell it today you would earn a total of  325.00  from holding iShares SP Global or generate 5.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

BetaPro SP 500  vs.  iShares SP Global

 Performance 
       Timeline  
BetaPro SP 500 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BetaPro SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.
iShares SP Global 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP Global are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, IShares SP displayed solid returns over the last few months and may actually be approaching a breakup point.

BetaPro SP and IShares SP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BetaPro SP and IShares SP

The main advantage of trading using opposite BetaPro SP and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, IShares 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 IShares SP will offset losses from the drop in IShares SP's long position.
The idea behind BetaPro SP 500 and iShares SP Global 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.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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