Correlation Between BetaPro Natural and BetaPro SPTSX
Can any of the company-specific risk be diversified away by investing in both BetaPro Natural and BetaPro SPTSX 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 Natural and BetaPro SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro Natural Gas and BetaPro SPTSX Capped, you can compare the effects of market volatilities on BetaPro Natural and BetaPro SPTSX 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 Natural with a short position of BetaPro SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Natural and BetaPro SPTSX.
Diversification Opportunities for BetaPro Natural and BetaPro SPTSX
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BetaPro and BetaPro is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Natural Gas and BetaPro SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SPTSX Capped and BetaPro Natural 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 Natural Gas are associated (or correlated) with BetaPro SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SPTSX Capped has no effect on the direction of BetaPro Natural i.e., BetaPro Natural and BetaPro SPTSX go up and down completely randomly.
Pair Corralation between BetaPro Natural and BetaPro SPTSX
Assuming the 90 days trading horizon BetaPro Natural Gas is expected to under-perform the BetaPro SPTSX. In addition to that, BetaPro Natural is 6.96 times more volatile than BetaPro SPTSX Capped. It trades about -0.03 of its total potential returns per unit of risk. BetaPro SPTSX Capped is currently generating about 0.24 per unit of volatility. If you would invest 2,193 in BetaPro SPTSX Capped on September 1, 2024 and sell it today you would earn a total of 1,078 from holding BetaPro SPTSX Capped or generate 49.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
BetaPro Natural Gas vs. BetaPro SPTSX Capped
Performance |
| Timeline |
| BetaPro Natural Gas |
| BetaPro SPTSX Capped |
BetaPro Natural and BetaPro SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Natural and BetaPro SPTSX
The main advantage of trading using opposite BetaPro Natural and BetaPro SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Natural position performs unexpectedly, BetaPro SPTSX 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 SPTSX will offset losses from the drop in BetaPro SPTSX's long position.| BetaPro Natural vs. BetaPro SPTSX Capped | BetaPro Natural vs. Forstrong Global Income | BetaPro Natural vs. BMO Aggregate Bond | BetaPro Natural vs. iShares Canadian HYBrid |
| BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SP TSX | BetaPro SPTSX vs. BetaPro SPTSX Capped |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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