Correlation Between BetaPro SP and IShares China
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and IShares China 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 IShares China 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 iShares China, you can compare the effects of market volatilities on BetaPro SP and IShares China 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 IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and IShares China.
Diversification Opportunities for BetaPro SP and IShares China
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BetaPro and IShares is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and iShares China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China 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 IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China has no effect on the direction of BetaPro SP i.e., BetaPro SP and IShares China go up and down completely randomly.
Pair Corralation between BetaPro SP and IShares China
Assuming the 90 days trading horizon BetaPro SP 500 is expected to generate 0.71 times more return on investment than IShares China. However, BetaPro SP 500 is 1.4 times less risky than IShares China. It trades about 0.35 of its potential returns per unit of risk. iShares China is currently generating about -0.05 per unit of risk. If you would invest 2,434 in BetaPro SP 500 on September 1, 2024 and sell it today you would earn a total of 280.00 from holding BetaPro SP 500 or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BetaPro SP 500 vs. iShares China
Performance |
| Timeline |
| BetaPro SP 500 |
| iShares China |
BetaPro SP and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and IShares China
The main advantage of trading using opposite BetaPro SP and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China's long position.| BetaPro SP vs. BetaPro SPTSX Capped | BetaPro SP vs. Forstrong Global Income | BetaPro SP vs. BMO Aggregate Bond | BetaPro SP vs. iShares Canadian HYBrid |
| IShares China vs. BMO MSCI India | IShares China vs. BMO MSCI Emerging | IShares China vs. BMO NASDAQ 100 | IShares China vs. BMO Equal Weight |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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