Correlation Between BetaPro SPTSX and Evolve Canadian

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

By analyzing existing cross correlation between BetaPro SPTSX Capped and Evolve Canadian Banks, you can compare the effects of market volatilities on BetaPro SPTSX and Evolve Canadian 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 SPTSX with a short position of Evolve Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and Evolve Canadian.

Diversification Opportunities for BetaPro SPTSX and Evolve Canadian

-0.61

Correlation Coefficient

BetaPro SPTSX  Evolve Canadian

Excellent diversification

The 3 months correlation between BetaPro and Evolve is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX Capped and Evolve Canadian Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Canadian Banks and BetaPro SPTSX 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 SPTSX Capped are associated (or correlated) with Evolve Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Canadian Banks has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and Evolve Canadian go up and down completely randomly.

Pair Corralation between BetaPro SPTSX and Evolve Canadian

Assuming the 90 days trading horizon BetaPro SPTSX Capped is expected to under-perform the Evolve Canadian. In addition to that, BetaPro SPTSX is 5.48 times more volatile than Evolve Canadian Banks. It trades about -0.05 of its total potential returns per unit of risk. Evolve Canadian Banks is currently generating about 0.31 per unit of volatility. If you would invest  744.00  in Evolve Canadian Banks on September 13, 2024 and sell it today you would earn a total of  82.00  from holding Evolve Canadian Banks or generate 11.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

BetaPro SPTSX Capped  vs.  Evolve Canadian Banks

BetaPro SPTSX Capped

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro SPTSX Capped 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.

Evolve Canadian Banks

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Canadian Banks are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BetaPro SPTSX and Evolve Canadian

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

The idea behind BetaPro SPTSX Capped and Evolve Canadian Banks 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..