Correlation Between BetaPro SP and BetaPro NASDAQ
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and BetaPro NASDAQ 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 SP and BetaPro NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SP 500 and BetaPro NASDAQ 100 2x, you can compare the effects of market volatilities on BetaPro SP and BetaPro NASDAQ 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 SP with a short position of BetaPro NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and BetaPro NASDAQ.
Diversification Opportunities for BetaPro SP and BetaPro NASDAQ
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 SP 500 and BetaPro NASDAQ 100 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro NASDAQ 100 and BetaPro SP 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 SP 500 are associated (or correlated) with BetaPro NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro NASDAQ 100 has no effect on the direction of BetaPro SP i.e., BetaPro SP and BetaPro NASDAQ go up and down completely randomly.
Pair Corralation between BetaPro SP and BetaPro NASDAQ
Assuming the 90 days trading horizon BetaPro SP 500 is expected to generate 0.76 times more return on investment than BetaPro NASDAQ. However, BetaPro SP 500 is 1.32 times less risky than BetaPro NASDAQ. It trades about -0.12 of its potential returns per unit of risk. BetaPro NASDAQ 100 2x is currently generating about -0.12 per unit of risk. If you would invest 1,606 in BetaPro SP 500 on August 24, 2024 and sell it today you would lose (78.00) from holding BetaPro SP 500 or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SP 500 vs. BetaPro NASDAQ 100 2x
Performance |
| Timeline |
| BetaPro SP 500 |
| BetaPro NASDAQ 100 |
BetaPro SP and BetaPro NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and BetaPro NASDAQ
The main advantage of trading using opposite BetaPro SP and BetaPro NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, BetaPro NASDAQ 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 NASDAQ will offset losses from the drop in BetaPro NASDAQ's long position.| BetaPro SP vs. BetaPro NASDAQ 100 2x | BetaPro SP vs. BetaPro Canadian Gold | BetaPro SP vs. BetaPro Crude Oil | BetaPro SP vs. BetaPro Natural Gas |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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