Correlation Between Beta Shares and IShares SP
Can any of the company-specific risk be diversified away by investing in both Beta Shares and IShares 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 Beta Shares and IShares SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beta Shares SPASX and iShares SP 500, you can compare the effects of market volatilities on Beta Shares and IShares 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 Beta Shares with a short position of IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beta Shares and IShares SP.
Diversification Opportunities for Beta Shares and IShares SP
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beta and IShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Beta Shares SPASX and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 and Beta Shares 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 Beta Shares SPASX are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Beta Shares i.e., Beta Shares and IShares SP go up and down completely randomly.
Pair Corralation between Beta Shares and IShares SP
Assuming the 90 days trading horizon Beta Shares SPASX is expected to generate 1.31 times more return on investment than IShares SP. However, Beta Shares is 1.31 times more volatile than iShares SP 500. It trades about 0.2 of its potential returns per unit of risk. iShares SP 500 is currently generating about 0.17 per unit of risk. If you would invest 1,600 in Beta Shares SPASX on August 29, 2024 and sell it today you would earn a total of 79.00 from holding Beta Shares SPASX or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beta Shares SPASX vs. iShares SP 500
Performance |
| Timeline |
| Beta Shares SPASX |
| iShares SP 500 |
Beta Shares and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beta Shares and IShares SP
The main advantage of trading using opposite Beta Shares and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beta Shares position performs unexpectedly, IShares 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 IShares SP will offset losses from the drop in IShares SP's long position.| Beta Shares vs. Beta Shares SPASX | Beta Shares vs. iShares MSCI Emerging | Beta Shares vs. Global X Hydrogen | Beta Shares vs. Janus Henderson Sustainable |
| IShares SP vs. Betashares Asia Technology | IShares SP vs. CD Private Equity | IShares SP vs. BetaShares Australia 200 | IShares SP vs. Australian High Interest |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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