Correlation Between BetaPro NASDAQ and BetaPro SP
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ 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 NASDAQ 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 NASDAQ 100 2x and BetaPro SP 500, you can compare the effects of market volatilities on BetaPro NASDAQ 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 NASDAQ with a short position of BetaPro SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and BetaPro SP.
Diversification Opportunities for BetaPro NASDAQ and BetaPro SP
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BetaPro and BetaPro is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x 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 NASDAQ 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 NASDAQ 100 2x 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 NASDAQ i.e., BetaPro NASDAQ and BetaPro SP go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and BetaPro SP
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to under-perform the BetaPro SP. In addition to that, BetaPro NASDAQ is 2.63 times more volatile than BetaPro SP 500. It trades about -0.1 of its total potential returns per unit of risk. BetaPro SP 500 is currently generating about -0.15 per unit of volatility. If you would invest 1,106 in BetaPro SP 500 on August 28, 2024 and sell it today you would lose (32.00) from holding BetaPro SP 500 or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro NASDAQ 100 2x vs. BetaPro SP 500
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| BetaPro SP 500 |
BetaPro NASDAQ and BetaPro SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and BetaPro SP
The main advantage of trading using opposite BetaPro NASDAQ and BetaPro SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ 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 NASDAQ vs. BetaPro SP 500 | BetaPro NASDAQ vs. BetaPro NASDAQ 100 2x | BetaPro NASDAQ vs. BetaPro SP 500 | BetaPro NASDAQ vs. BetaPro SPTSX 60 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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