Correlation Between BetaShares Geared and BetaShares Diversified

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

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

Diversification Opportunities for BetaShares Geared and BetaShares Diversified

0.98

Correlation Coefficient

BetaShares Geared  BetaShares Diversified

Almost no diversification

The 3 months correlation between BetaShares and BetaShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Australian and BetaShares Diversified High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Diversified and BetaShares Geared 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 Geared Australian are associated (or correlated) with BetaShares Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Diversified has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and BetaShares Diversified go up and down completely randomly.

Pair Corralation between BetaShares Geared and BetaShares Diversified

Assuming the 90 days trading horizon BetaShares Geared Australian is expected to under-perform the BetaShares Diversified. In addition to that, BetaShares Geared is 2.76 times more volatile than BetaShares Diversified High. It trades about -0.06 of its total potential returns per unit of risk. BetaShares Diversified High is currently generating about -0.05 per unit of volatility. If you would invest  3,649  in BetaShares Diversified High on December 30, 2024 and sell it today you would lose (74.00) from holding BetaShares Diversified High or give up 2.03% of portfolio value over 90 days.

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

BetaShares Geared Australian  vs.  BetaShares Diversified High

BetaShares Geared

Risk-Adjusted Performance

Very Weak

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

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BetaShares Geared and BetaShares Diversified

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

The idea behind BetaShares Geared Australian and BetaShares Diversified High 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.

Check out your portfolio center.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.