Correlation Between BetaShares Diversified and BetaShares Australian

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

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

Diversification Opportunities for BetaShares Diversified and BetaShares Australian

-0.96

Correlation Coefficient

BetaShares Diversified  BetaShares Australian

Pay attention - limited upside

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

Pair Corralation between BetaShares Diversified and BetaShares Australian

Assuming the 90 days trading horizon BetaShares Diversified High is expected to under-perform the BetaShares Australian. But the etf apears to be less risky and, when comparing its historical volatility, BetaShares Diversified High is 1.18 times less risky than BetaShares Australian. The etf trades about -0.05 of its potential returns per unit of risk. The BetaShares Australian EquitiesBear is currently generating about 0.09 of returns per unit of risk over similar time horizon. 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 Diversified High  vs.  BetaShares Australian Equities

BetaShares Diversified

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with BetaShares Diversified and BetaShares Australian

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

The idea behind BetaShares Diversified High and BetaShares Australian EquitiesBear 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.