Correlation Between BetaShares Climate and BetaShares Cloud

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

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

Diversification Opportunities for BetaShares Climate and BetaShares Cloud

0.34

Correlation Coefficient

BetaShares Climate  BetaShares Cloud

Weak diversification

The 3 months correlation between BetaShares and BetaShares is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Climate Change and BetaShares Cloud Computing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Cloud Com and BetaShares Climate 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 Climate Change are associated (or correlated) with BetaShares Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Cloud Com has no effect on the direction of BetaShares Climate i.e., BetaShares Climate and BetaShares Cloud go up and down completely randomly.

Pair Corralation between BetaShares Climate and BetaShares Cloud

Assuming the 90 days trading horizon BetaShares Climate is expected to generate 4.65 times less return on investment than BetaShares Cloud. But when comparing it to its historical volatility, BetaShares Climate Change is 1.26 times less risky than BetaShares Cloud. It trades about 0.1 of its potential returns per unit of risk. BetaShares Cloud Computing is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  1,138  in BetaShares Cloud Computing on September 12, 2024 and sell it today you would earn a total of  419.00  from holding BetaShares Cloud Computing or generate 36.82% return on investment over 90 days.

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

BetaShares Climate Change  vs.  BetaShares Cloud Computing

BetaShares Climate Change

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Climate Change are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Climate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BetaShares Cloud Com

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Cloud Computing are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Cloud unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaShares Climate and BetaShares Cloud

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

The idea behind BetaShares Climate Change and BetaShares Cloud Computing 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.