Correlation Between BetaPro NASDAQ and IShares Small
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and IShares Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on BetaPro NASDAQ and IShares Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and IShares Small.
Diversification Opportunities for BetaPro NASDAQ and IShares Small
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BetaPro and IShares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and iShares Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Small Cap has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and IShares Small go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and IShares Small
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to generate 1.68 times more return on investment than IShares Small. However, BetaPro NASDAQ is 1.68 times more volatile than iShares Small Cap. It trades about 0.1 of its potential returns per unit of risk. iShares Small Cap is currently generating about 0.07 per unit of risk. If you would invest 1,125 in BetaPro NASDAQ 100 2x on August 30, 2024 and sell it today you would earn a total of 1,214 from holding BetaPro NASDAQ 100 2x or generate 107.91% 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. iShares Small Cap
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| iShares Small Cap |
BetaPro NASDAQ and IShares Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and IShares Small
The main advantage of trading using opposite BetaPro NASDAQ and IShares Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ position performs unexpectedly, IShares Small 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 Small will offset losses from the drop in IShares Small's long position.| BetaPro NASDAQ vs. BetaPro Canadian Gold | BetaPro NASDAQ vs. BetaPro Crude Oil | BetaPro NASDAQ vs. BetaPro Natural Gas | BetaPro NASDAQ vs. BetaPro SPTSX 60 |
| IShares Small vs. iShares SPTSX Small | IShares Small vs. iShares MSCI Europe | IShares Small vs. BMO Aggregate Bond | IShares Small vs. iShares Canadian HYBrid |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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