Correlation Between BetaShares Geared and BetaShares Global

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

By analyzing existing cross correlation between BetaShares Geared Equity and BetaShares Global Sustainability, you can compare the effects of market volatilities on BetaShares Geared and BetaShares Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Geared and BetaShares Global.

Diversification Opportunities for BetaShares Geared and BetaShares Global

0.48

Correlation Coefficient

BetaShares Geared  BetaShares Global

Very weak diversification

The 3 months correlation between BetaShares and BetaShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Equity and BetaShares Global Sustainabili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Global 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 Equity are associated (or correlated) with BetaShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Global has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and BetaShares Global go up and down completely randomly.

Pair Corralation between BetaShares Geared and BetaShares Global

Assuming the 90 days trading horizon BetaShares Geared Equity is expected to generate 2.62 times more return on investment than BetaShares Global. However, BetaShares Geared is 2.62 times more volatile than BetaShares Global Sustainability. It trades about 0.07 of its potential returns per unit of risk. BetaShares Global Sustainability is currently generating about 0.16 per unit of risk. If you would invest  4,375  in BetaShares Geared Equity on October 26, 2024 and sell it today you would earn a total of  328.00  from holding BetaShares Geared Equity or generate 7.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

BetaShares Geared Equity  vs.  BetaShares Global Sustainabili

BetaShares Geared Equity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Geared Equity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BetaShares Geared may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BetaShares Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Global Sustainability are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BetaShares Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BetaShares Geared and BetaShares Global

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

The idea behind BetaShares Geared Equity and BetaShares Global Sustainability 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.