Correlation Between BetaPro SP and BetaPro SPTSX
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and BetaPro SPTSX 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 SPTSX 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 SPTSX Capped, you can compare the effects of market volatilities on BetaPro SP and BetaPro SPTSX 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 SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and BetaPro SPTSX.
Diversification Opportunities for BetaPro SP and BetaPro SPTSX
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BetaPro and BetaPro is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP TSX and BetaPro SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SPTSX Capped 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 SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SPTSX Capped has no effect on the direction of BetaPro SP i.e., BetaPro SP and BetaPro SPTSX go up and down completely randomly.
Pair Corralation between BetaPro SP and BetaPro SPTSX
Assuming the 90 days trading horizon BetaPro SP is expected to generate 1.34 times less return on investment than BetaPro SPTSX. But when comparing it to its historical volatility, BetaPro SP TSX is 1.12 times less risky than BetaPro SPTSX. It trades about 0.07 of its potential returns per unit of risk. BetaPro SPTSX Capped is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,830 in BetaPro SPTSX Capped on August 29, 2024 and sell it today you would earn a total of 1,425 from holding BetaPro SPTSX Capped or generate 77.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro SP TSX vs. BetaPro SPTSX Capped
Performance |
| Timeline |
| BetaPro SP TSX |
| BetaPro SPTSX Capped |
BetaPro SP and BetaPro SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and BetaPro SPTSX
The main advantage of trading using opposite BetaPro SP and BetaPro SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, BetaPro SPTSX 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 SPTSX will offset losses from the drop in BetaPro SPTSX'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 SPTSX vs. BetaPro Canadian Gold | BetaPro SPTSX vs. BetaPro Crude Oil | BetaPro SPTSX vs. BetaPro Natural Gas | BetaPro SPTSX vs. BetaPro SPTSX Capped |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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