Correlation Between BetaPro SP and BetaPro Gold
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and BetaPro Gold 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 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro SP TSX and BetaPro Gold Bullion, you can compare the effects of market volatilities on BetaPro SP and BetaPro Gold 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 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and BetaPro Gold.
Diversification Opportunities for BetaPro SP and BetaPro Gold
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BetaPro and BetaPro is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP TSX and BetaPro Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Gold Bullion 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 TSX are associated (or correlated) with BetaPro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Gold Bullion has no effect on the direction of BetaPro SP i.e., BetaPro SP and BetaPro Gold go up and down completely randomly.
Pair Corralation between BetaPro SP and BetaPro Gold
Assuming the 90 days trading horizon BetaPro SP TSX is expected to generate 0.47 times more return on investment than BetaPro Gold. However, BetaPro SP TSX is 2.14 times less risky than BetaPro Gold. It trades about 0.28 of its potential returns per unit of risk. BetaPro Gold Bullion is currently generating about -0.01 per unit of risk. If you would invest 2,569 in BetaPro SP TSX on August 29, 2024 and sell it today you would earn a total of 309.00 from holding BetaPro SP TSX or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SP TSX vs. BetaPro Gold Bullion
Performance |
| Timeline |
| BetaPro SP TSX |
| BetaPro Gold Bullion |
BetaPro SP and BetaPro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and BetaPro Gold
The main advantage of trading using opposite BetaPro SP and BetaPro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, BetaPro Gold 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 Gold will offset losses from the drop in BetaPro Gold's long position.| BetaPro SP vs. BetaPro SPTSX 60 | BetaPro SP vs. BetaPro SPTSX Capped | BetaPro SP vs. BetaPro SP 500 | BetaPro SP vs. BetaPro SP TSX |
| BetaPro Gold vs. BetaPro Gold Bullion | BetaPro Gold vs. BetaPro Silver 2x | BetaPro Gold vs. BetaPro SPTSX Capped | BetaPro Gold vs. BetaPro SP TSX |
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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