Correlation Between BetaPro NASDAQ and Desjardins Alt
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and Desjardins Alt 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 Desjardins Alt 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 Desjardins Alt LongShort, you can compare the effects of market volatilities on BetaPro NASDAQ and Desjardins Alt 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 Desjardins Alt. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and Desjardins Alt.
Diversification Opportunities for BetaPro NASDAQ and Desjardins Alt
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BetaPro and Desjardins is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and Desjardins Alt LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins Alt LongShort 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 Desjardins Alt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins Alt LongShort has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and Desjardins Alt go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and Desjardins Alt
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to generate 28.28 times more return on investment than Desjardins Alt. However, BetaPro NASDAQ is 28.28 times more volatile than Desjardins Alt LongShort. It trades about 0.01 of its potential returns per unit of risk. Desjardins Alt LongShort is currently generating about -0.08 per unit of risk. If you would invest 2,494 in BetaPro NASDAQ 100 2x on October 9, 2024 and sell it today you would earn a total of 2.00 from holding BetaPro NASDAQ 100 2x or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro NASDAQ 100 2x vs. Desjardins Alt LongShort
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| Desjardins Alt LongShort |
BetaPro NASDAQ and Desjardins Alt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and Desjardins Alt
The main advantage of trading using opposite BetaPro NASDAQ and Desjardins Alt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ position performs unexpectedly, Desjardins Alt 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 Desjardins Alt will offset losses from the drop in Desjardins Alt's long position.| BetaPro NASDAQ vs. BetaPro SP 500 | BetaPro NASDAQ vs. BetaPro NASDAQ 100 2x | BetaPro NASDAQ vs. BetaPro SP TSX | BetaPro NASDAQ vs. BetaPro SP 500 |
| Desjardins Alt vs. AGFiQ Market Neutral | Desjardins Alt vs. Desjardins RI Canada | Desjardins Alt vs. NBI Liquid Alternatives | Desjardins Alt vs. Desjardins RI USA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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