Correlation Between BetaPro SP and BetaPro SP
Can any of the company-specific risk be diversified away by investing in both BetaPro SP and BetaPro SP 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 SP 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 SP 500, you can compare the effects of market volatilities on BetaPro SP and BetaPro SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and BetaPro SP.
Diversification Opportunities for BetaPro SP and BetaPro SP
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BetaPro and BetaPro is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP TSX and BetaPro SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SP 500 has no effect on the direction of BetaPro SP i.e., BetaPro SP and BetaPro SP go up and down completely randomly.
Pair Corralation between BetaPro SP and BetaPro SP
Assuming the 90 days trading horizon BetaPro SP is expected to generate 1.21 times less return on investment than BetaPro SP. But when comparing it to its historical volatility, BetaPro SP TSX is 1.1 times less risky than BetaPro SP. It trades about 0.1 of its potential returns per unit of risk. BetaPro SP 500 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,534 in BetaPro SP 500 on August 31, 2024 and sell it today you would earn a total of 1,161 from holding BetaPro SP 500 or generate 75.68% 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 SP 500
Performance |
| Timeline |
| BetaPro SP TSX |
| BetaPro SP 500 |
BetaPro SP and BetaPro SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro SP and BetaPro SP
The main advantage of trading using opposite BetaPro SP and BetaPro SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP position performs unexpectedly, BetaPro SP 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 SP will offset losses from the drop in BetaPro SP'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 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 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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