Correlation Between BetaPro SP and BetaPro Equal
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and BetaPro Equal 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 Equal 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 Equal Weight, you can compare the effects of market volatilities on BetaPro SP and BetaPro Equal 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 Equal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and BetaPro Equal.
Diversification Opportunities for BetaPro SP and BetaPro Equal
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BetaPro and BetaPro is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and BetaPro Equal Weight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Equal Weight 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 Equal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Equal Weight has no effect on the direction of BetaPro SP i.e., BetaPro SP and BetaPro Equal go up and down completely randomly.
Pair Corralation between BetaPro SP and BetaPro Equal
Assuming the 90 days trading horizon BetaPro SP 500 is expected to generate 1.09 times more return on investment than BetaPro Equal. However, BetaPro SP is 1.09 times more volatile than BetaPro Equal Weight. It trades about 0.35 of its potential returns per unit of risk. BetaPro Equal Weight is currently generating about 0.25 per unit of risk. If you would invest 2,441 in BetaPro SP 500 on September 3, 2024 and sell it today you would earn a total of 273.00 from holding BetaPro SP 500 or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
BetaPro SP 500 vs. BetaPro Equal Weight
Performance |
| Timeline |
| BetaPro SP 500 |
| BetaPro Equal Weight |
BetaPro SP and BetaPro Equal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and BetaPro Equal
The main advantage of trading using opposite BetaPro SP and BetaPro Equal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, BetaPro Equal 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 Equal will offset losses from the drop in BetaPro Equal's long position.| BetaPro SP vs. BetaPro NASDAQ 100 2x | BetaPro SP vs. BetaPro SP 500 | BetaPro SP vs. BetaPro SP TSX | BetaPro SP vs. BetaPro NASDAQ 100 2x |
| BetaPro Equal vs. BetaPro SP TSX | BetaPro Equal vs. BetaPro SP TSX | BetaPro Equal vs. BetaPro SPTSX Capped | BetaPro Equal 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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