Correlation Between BetaPro Crude and IShares ESG
Can any of the company-specific risk be diversified away by investing in both BetaPro Crude and IShares ESG 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 IShares ESG 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 iShares ESG Aware, you can compare the effects of market volatilities on BetaPro Crude and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Crude and IShares ESG.
Diversification Opportunities for BetaPro Crude and IShares ESG
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BetaPro and IShares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Crude Oil and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of BetaPro Crude i.e., BetaPro Crude and IShares ESG go up and down completely randomly.
Pair Corralation between BetaPro Crude and IShares ESG
Assuming the 90 days trading horizon BetaPro Crude Oil is expected to generate 21.58 times more return on investment than IShares ESG. However, BetaPro Crude is 21.58 times more volatile than iShares ESG Aware. It trades about 0.01 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.09 per unit of risk. If you would invest 1,457 in BetaPro Crude Oil on August 26, 2024 and sell it today you would lose (234.00) from holding BetaPro Crude Oil or give up 16.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro Crude Oil vs. iShares ESG Aware
Performance |
| Timeline |
| BetaPro Crude Oil |
| iShares ESG Aware |
BetaPro Crude and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro Crude and IShares ESG
The main advantage of trading using opposite BetaPro Crude and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro Crude position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG'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 |
| IShares ESG vs. Mackenzie Canadian Aggregate | IShares ESG vs. Mackenzie Canadian Short | IShares ESG vs. Mackenzie Core Plus | IShares ESG vs. Mackenzie Investment Grade |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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