Correlation Between BetaPro Natural and BetaPro Canadian
Can any of the company-specific risk be diversified away by investing in both BetaPro Natural and BetaPro Canadian 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 Canadian 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 Canadian Gold, you can compare the effects of market volatilities on BetaPro Natural and BetaPro Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Natural and BetaPro Canadian.
Diversification Opportunities for BetaPro Natural and BetaPro Canadian
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BetaPro and BetaPro is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Natural Gas and BetaPro Canadian Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Canadian Gold 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 Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Canadian Gold has no effect on the direction of BetaPro Natural i.e., BetaPro Natural and BetaPro Canadian go up and down completely randomly.
Pair Corralation between BetaPro Natural and BetaPro Canadian
Assuming the 90 days trading horizon BetaPro Natural Gas is expected to under-perform the BetaPro Canadian. In addition to that, BetaPro Natural is 1.85 times more volatile than BetaPro Canadian Gold. It trades about -0.01 of its total potential returns per unit of risk. BetaPro Canadian Gold is currently generating about 0.14 per unit of volatility. If you would invest 200.00 in BetaPro Canadian Gold on August 25, 2024 and sell it today you would earn a total of 24.00 from holding BetaPro Canadian Gold or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro Natural Gas vs. BetaPro Canadian Gold
Performance |
| Timeline |
| BetaPro Natural Gas |
| BetaPro Canadian Gold |
BetaPro Natural and BetaPro Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Natural and BetaPro Canadian
The main advantage of trading using opposite BetaPro Natural and BetaPro Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Natural position performs unexpectedly, BetaPro Canadian 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 Canadian will offset losses from the drop in BetaPro Canadian's long position.| BetaPro Natural vs. BetaPro Natural Gas | BetaPro Natural vs. BetaPro Crude Oil | BetaPro Natural vs. BetaPro Canadian Gold | BetaPro Natural vs. BetaPro Crude Oil |
| BetaPro Canadian vs. BetaPro Canadian Gold | BetaPro Canadian vs. BetaPro Crude Oil | BetaPro Canadian vs. BetaPro Natural Gas | BetaPro Canadian 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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