Correlation Between BetaShares Australian and SPDR SP

Can any of the company-specific risk be diversified away by investing in both BetaShares Australian and SPDR SP 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 SPDR SP 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 SPDR SP 500, you can compare the effects of market volatilities on BetaShares Australian and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Australian and SPDR SP.

Diversification Opportunities for BetaShares Australian and SPDR SP

-0.91

Correlation Coefficient

BetaShares Australian  SPDR SP

Pay attention - limited upside

The 3 months correlation between BetaShares and SPDR is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Australian Equities and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of BetaShares Australian i.e., BetaShares Australian and SPDR SP go up and down completely randomly.

Pair Corralation between BetaShares Australian and SPDR SP

Assuming the 90 days trading horizon BetaShares Australian EquitiesBear is expected to generate 0.99 times more return on investment than SPDR SP. However, BetaShares Australian EquitiesBear is 1.01 times less risky than SPDR SP. It trades about 0.09 of its potential returns per unit of risk. SPDR SP 500 is currently generating about -0.11 per unit of risk. If you would invest  776.00  in BetaShares Australian EquitiesBear on December 30, 2024 and sell it today you would earn a total of  29.00  from holding BetaShares Australian EquitiesBear or generate 3.74% 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.  SPDR SP 500

BetaShares Australian

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Australian EquitiesBear are ranked lower than 6 (%) 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.

SPDR SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SPDR SP 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 SPDR SP

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

The idea behind BetaShares Australian EquitiesBear and SPDR SP 500 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.