Correlation Between BetaShares Australian and BetaShares Australia

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

By analyzing existing cross correlation between BetaShares Australian EquitiesBear and BetaShares Australia 200, you can compare the effects of market volatilities on BetaShares Australian and BetaShares Australia 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 Australian with a short position of BetaShares Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Australian and BetaShares Australia.

Diversification Opportunities for BetaShares Australian and BetaShares Australia

-0.88

Correlation Coefficient

BetaShares Australian  BetaShares Australia

Pay attention - limited upside

The 3 months correlation between BetaShares and BetaShares is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Australian Equities and BetaShares Australia 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Australia 200 and BetaShares Australian 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 Australian EquitiesBear are associated (or correlated) with BetaShares Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Australia 200 has no effect on the direction of BetaShares Australian i.e., BetaShares Australian and BetaShares Australia go up and down completely randomly.

Pair Corralation between BetaShares Australian and BetaShares Australia

Assuming the 90 days trading horizon BetaShares Australian EquitiesBear is expected to generate 1.02 times more return on investment than BetaShares Australia. However, BetaShares Australian is 1.02 times more volatile than BetaShares Australia 200. It trades about 0.11 of its potential returns per unit of risk. BetaShares Australia 200 is currently generating about -0.06 per unit of risk. If you would invest  752.00  in BetaShares Australian EquitiesBear on December 1, 2024 and sell it today you would earn a total of  34.00  from holding BetaShares Australian EquitiesBear or generate 4.52% return on investment over 90 days.

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

BetaShares Australian Equities  vs.  BetaShares Australia 200

BetaShares Australian

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Australian EquitiesBear are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BetaShares Australian is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BetaShares Australia 200

Risk-Adjusted Performance

Very Weak

Over the last 90 days BetaShares Australia 200 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BetaShares Australia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BetaShares Australian and BetaShares Australia

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

The idea behind BetaShares Australian EquitiesBear and BetaShares Australia 200 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.