Correlation Between BetaPro Crude and BetaPro SP
Can any of the company-specific risk be diversified away by investing in both BetaPro Crude 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 Crude 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 Crude Oil and BetaPro SP 500, you can compare the effects of market volatilities on BetaPro Crude 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 Crude with a short position of BetaPro SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Crude and BetaPro SP.
Diversification Opportunities for BetaPro Crude and BetaPro SP
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BetaPro and BetaPro is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Crude Oil 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 Crude 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 Crude Oil 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 Crude i.e., BetaPro Crude and BetaPro SP go up and down completely randomly.
Pair Corralation between BetaPro Crude and BetaPro SP
Assuming the 90 days trading horizon BetaPro Crude is expected to generate 13.82 times less return on investment than BetaPro SP. But when comparing it to its historical volatility, BetaPro Crude Oil is 3.79 times less risky than BetaPro SP. It trades about 0.01 of its potential returns per unit of risk. BetaPro SP 500 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 763.00 in BetaPro SP 500 on August 24, 2024 and sell it today you would earn a total of 765.00 from holding BetaPro SP 500 or generate 100.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro Crude Oil vs. BetaPro SP 500
Performance |
| Timeline |
| BetaPro Crude Oil |
| BetaPro SP 500 |
BetaPro Crude and BetaPro SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Crude and BetaPro SP
The main advantage of trading using opposite BetaPro Crude and BetaPro SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Crude 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.| 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 |
| BetaPro SP vs. BetaPro NASDAQ 100 2x | BetaPro SP vs. BetaPro Canadian Gold | BetaPro SP vs. BetaPro Crude Oil | BetaPro SP vs. BetaPro Natural Gas |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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