Correlation Between SPASX Dividend and BetaShares Crude

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

By analyzing existing cross correlation between SPASX Dividend Opportunities and BetaShares Crude Oil, you can compare the effects of market volatilities on SPASX Dividend and BetaShares Crude 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 SPASX Dividend with a short position of BetaShares Crude. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPASX Dividend and BetaShares Crude.

Diversification Opportunities for SPASX Dividend and BetaShares Crude

0.08

Correlation Coefficient

SPASX Dividend  BetaShares Crude

Significant diversification

The 3 months correlation between SPASX and BetaShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SPASX Dividend Opportunities and BetaShares Crude Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Crude Oil and SPASX Dividend 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 SPASX Dividend Opportunities are associated (or correlated) with BetaShares Crude. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Crude Oil has no effect on the direction of SPASX Dividend i.e., SPASX Dividend and BetaShares Crude go up and down completely randomly.

Pair Corralation between SPASX Dividend and BetaShares Crude

Assuming the 90 days trading horizon SPASX Dividend Opportunities is expected to under-perform the BetaShares Crude. But the index apears to be less risky and, when comparing its historical volatility, SPASX Dividend Opportunities is 2.16 times less risky than BetaShares Crude. The index trades about -0.01 of its potential returns per unit of risk. The BetaShares Crude Oil is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  541.00  in BetaShares Crude Oil on December 4, 2024 and sell it today you would earn a total of  11.00  from holding BetaShares Crude Oil or generate 2.03% return on investment over 90 days.

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

SPASX Dividend Opportunities  vs.  BetaShares Crude Oil

Pair Trading with SPASX Dividend and BetaShares Crude

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

The idea behind SPASX Dividend Opportunities and BetaShares Crude Oil 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.