Correlation Between BetaPro Gold and BetaPro Inverse

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

By analyzing existing cross correlation between BetaPro Gold Bullion and BetaPro Inverse Bitcoin, you can compare the effects of market volatilities on BetaPro Gold and BetaPro Inverse 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 BetaPro Gold with a short position of BetaPro Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Gold and BetaPro Inverse.

Diversification Opportunities for BetaPro Gold and BetaPro Inverse

0.1

Correlation Coefficient

BetaPro Gold  BetaPro Inverse

Average diversification

The 3 months correlation between BetaPro and BetaPro is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Gold Bullion and BetaPro Inverse Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Inverse Bitcoin and BetaPro Gold 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 BetaPro Gold Bullion are associated (or correlated) with BetaPro Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Inverse Bitcoin has no effect on the direction of BetaPro Gold i.e., BetaPro Gold and BetaPro Inverse go up and down completely randomly.

Pair Corralation between BetaPro Gold and BetaPro Inverse

Assuming the 90 days trading horizon BetaPro Gold Bullion is expected to generate 0.67 times more return on investment than BetaPro Inverse. However, BetaPro Gold Bullion is 1.49 times less risky than BetaPro Inverse. It trades about -0.11 of its potential returns per unit of risk. BetaPro Inverse Bitcoin is currently generating about -0.12 per unit of risk. If you would invest  2,656  in BetaPro Gold Bullion on September 12, 2024 and sell it today you would lose (142.00) from holding BetaPro Gold Bullion or give up 5.35% of portfolio value over 90 days.

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

BetaPro Gold Bullion  vs.  BetaPro Inverse Bitcoin

BetaPro Gold Bullion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro Gold Bullion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

BetaPro Inverse Bitcoin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro Inverse Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with BetaPro Gold and BetaPro Inverse

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

The idea behind BetaPro Gold Bullion and BetaPro Inverse Bitcoin 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.