Correlation Between Australian High and BetaShares Managed

Can any of the company-specific risk be diversified away by investing in both Australian High and BetaShares Managed 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 Australian High and BetaShares Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Australian High Interest and BetaShares Managed Risk, you can compare the effects of market volatilities on Australian High and BetaShares Managed 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 Australian High with a short position of BetaShares Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian High and BetaShares Managed.

Diversification Opportunities for Australian High and BetaShares Managed

0.96

Correlation Coefficient

Australian High  BetaShares Managed

Almost no diversification

The 3 months correlation between Australian and BetaShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and BetaShares Managed Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Managed Risk and Australian High 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 Australian High Interest are associated (or correlated) with BetaShares Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Managed Risk has no effect on the direction of Australian High i.e., Australian High and BetaShares Managed go up and down completely randomly.

Pair Corralation between Australian High and BetaShares Managed

Assuming the 90 days trading horizon Australian High is expected to generate 5.18 times less return on investment than BetaShares Managed. But when comparing it to its historical volatility, Australian High Interest is 35.65 times less risky than BetaShares Managed. It trades about 0.92 of its potential returns per unit of risk. BetaShares Managed Risk is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,545  in BetaShares Managed Risk on September 12, 2024 and sell it today you would earn a total of  520.00  from holding BetaShares Managed Risk or generate 33.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Australian High Interest  vs.  BetaShares Managed Risk

Australian High Interest

Risk-Adjusted Performance

70 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Australian High Interest are ranked lower than 70 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Australian High is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

BetaShares Managed Risk

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Managed Risk are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Managed may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Australian High and BetaShares Managed

The main advantage of trading using opposite Australian High and BetaShares Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian High position performs unexpectedly, BetaShares Managed 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 Managed will offset losses from the drop in BetaShares Managed's long position.

The idea behind Australian High Interest and BetaShares Managed Risk 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.