Correlation Between BetaShares Geared and Russell Australian

Can any of the company-specific risk be diversified away by investing in both BetaShares Geared and Russell 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 Geared and Russell Australian 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 Russell Australian Government, you can compare the effects of market volatilities on BetaShares Geared and Russell 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 Geared with a short position of Russell Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and Russell Australian.

Diversification Opportunities for BetaShares Geared and Russell Australian

-0.45

Correlation Coefficient

BetaShares Geared  Russell Australian

Very good diversification

The 3 months correlation between BetaShares and Russell is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Australian and Russell Australian Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russell Australian 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 Russell Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russell Australian has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and Russell Australian go up and down completely randomly.

Pair Corralation between BetaShares Geared and Russell Australian

Assuming the 90 days trading horizon BetaShares Geared Australian is expected to generate 3.44 times more return on investment than Russell Australian. However, BetaShares Geared is 3.44 times more volatile than Russell Australian Government. It trades about 0.11 of its potential returns per unit of risk. Russell Australian Government is currently generating about -0.05 per unit of risk. If you would invest  3,074  in BetaShares Geared Australian on September 3, 2024 and sell it today you would earn a total of  294.00  from holding BetaShares Geared Australian or generate 9.56% return on investment over 90 days.

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

BetaShares Geared Australian  vs.  Russell Australian Government

BetaShares Geared

Risk-Adjusted Performance

8 of 100

OK

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

Russell Australian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Russell Australian Government has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Russell 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 Geared and Russell Australian

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

The idea behind BetaShares Geared Australian and Russell Australian Government 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.