Correlation Between BetaPro NASDAQ and IShares SPTSX
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and IShares SPTSX 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 IShares SPTSX 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 iShares SPTSX Global, you can compare the effects of market volatilities on BetaPro NASDAQ and IShares SPTSX 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 IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and IShares SPTSX.
Diversification Opportunities for BetaPro NASDAQ and IShares SPTSX
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BetaPro and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and iShares SPTSX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX Global 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 IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX Global has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and IShares SPTSX go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and IShares SPTSX
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to generate 1.33 times more return on investment than IShares SPTSX. However, BetaPro NASDAQ is 1.33 times more volatile than iShares SPTSX Global. It trades about 0.11 of its potential returns per unit of risk. iShares SPTSX Global is currently generating about -0.05 per unit of risk. If you would invest 2,268 in BetaPro NASDAQ 100 2x on August 28, 2024 and sell it today you would earn a total of 111.00 from holding BetaPro NASDAQ 100 2x or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro NASDAQ 100 2x vs. iShares SPTSX Global
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| iShares SPTSX Global |
BetaPro NASDAQ and IShares SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and IShares SPTSX
The main advantage of trading using opposite BetaPro NASDAQ and IShares SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ position performs unexpectedly, IShares SPTSX 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 SPTSX will offset losses from the drop in IShares SPTSX's long position.The idea behind BetaPro NASDAQ 100 2x and iShares SPTSX Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares SPTSX Capped | IShares SPTSX vs. iShares Global Agriculture | IShares SPTSX vs. iShares 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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