Correlation Between BetaShares Global and BetaShares Geared
Can any of the company-specific risk be diversified away by investing in both BetaShares Global 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 BetaShares Global and BetaShares Geared into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaShares Global Robotics and BetaShares Geared Australian, you can compare the effects of market volatilities on BetaShares Global 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 BetaShares Global with a short position of BetaShares Geared. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Global and BetaShares Geared.
Diversification Opportunities for BetaShares Global and BetaShares Geared
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BetaShares and BetaShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Global Robotics and BetaShares Geared Australian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Geared and BetaShares Global 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 BetaShares Global Robotics 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 has no effect on the direction of BetaShares Global i.e., BetaShares Global and BetaShares Geared go up and down completely randomly.
Pair Corralation between BetaShares Global and BetaShares Geared
Assuming the 90 days trading horizon BetaShares Global Robotics is expected to generate 0.87 times more return on investment than BetaShares Geared. However, BetaShares Global Robotics is 1.15 times less risky than BetaShares Geared. It trades about 0.2 of its potential returns per unit of risk. BetaShares Geared Australian is currently generating about 0.13 per unit of risk. If you would invest 1,395 in BetaShares Global Robotics on August 29, 2024 and sell it today you would earn a total of 77.00 from holding BetaShares Global Robotics or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaShares Global Robotics vs. BetaShares Geared Australian
Performance |
| Timeline |
| BetaShares Global |
| BetaShares Geared |
BetaShares Global and BetaShares Geared Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaShares Global and BetaShares Geared
The main advantage of trading using opposite BetaShares Global and BetaShares Geared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Global 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 BetaShares Global Robotics and BetaShares Geared Australian 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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