Correlation Between SPDR MSCI and BetaShares Geared
Can any of the company-specific risk be diversified away by investing in both SPDR MSCI and BetaShares Geared 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 SPDR MSCI and BetaShares Geared into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR MSCI World and BetaShares Geared Equity, you can compare the effects of market volatilities on SPDR MSCI and BetaShares Geared 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 SPDR MSCI with a short position of BetaShares Geared. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and BetaShares Geared.
Diversification Opportunities for SPDR MSCI and BetaShares Geared
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and BetaShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI World and BetaShares Geared Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Geared Equity and SPDR MSCI 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 SPDR MSCI World are associated (or correlated) with BetaShares Geared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Geared Equity has no effect on the direction of SPDR MSCI i.e., SPDR MSCI and BetaShares Geared go up and down completely randomly.
Pair Corralation between SPDR MSCI and BetaShares Geared
Assuming the 90 days trading horizon SPDR MSCI is expected to generate 1.99 times less return on investment than BetaShares Geared. But when comparing it to its historical volatility, SPDR MSCI World is 1.15 times less risky than BetaShares Geared. It trades about 0.11 of its potential returns per unit of risk. BetaShares Geared Equity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,989 in BetaShares Geared Equity on September 12, 2024 and sell it today you would earn a total of 698.00 from holding BetaShares Geared Equity or generate 17.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
SPDR MSCI World vs. BetaShares Geared Equity
Performance |
| Timeline |
| SPDR MSCI World |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| BetaShares Geared Equity |
SPDR MSCI and BetaShares Geared Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MSCI and BetaShares Geared
The main advantage of trading using opposite SPDR MSCI and BetaShares Geared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI position performs unexpectedly, BetaShares Geared 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 BetaShares Geared will offset losses from the drop in BetaShares Geared's long position.The idea behind SPDR MSCI World and BetaShares Geared Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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