Correlation Between BetaPro SPTSX and Guardian Ultra

Can any of the company-specific risk be diversified away by investing in both BetaPro SPTSX and Guardian Ultra 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 Guardian Ultra 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 Guardian Ultra Short Canadian, you can compare the effects of market volatilities on BetaPro SPTSX and Guardian Ultra 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 Guardian Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and Guardian Ultra.

Diversification Opportunities for BetaPro SPTSX and Guardian Ultra

-0.6

Correlation Coefficient

BetaPro SPTSX  Guardian Ultra

Excellent diversification

The 3 months correlation between BetaPro and Guardian is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX Capped and Guardian Ultra Short Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Ultra Short 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 Guardian Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Ultra Short has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and Guardian Ultra go up and down completely randomly.

Pair Corralation between BetaPro SPTSX and Guardian Ultra

Assuming the 90 days trading horizon BetaPro SPTSX Capped is expected to under-perform the Guardian Ultra. In addition to that, BetaPro SPTSX is 150.34 times more volatile than Guardian Ultra Short Canadian. It trades about -0.04 of its total potential returns per unit of risk. Guardian Ultra Short Canadian is currently generating about 0.76 per unit of volatility. If you would invest  4,961  in Guardian Ultra Short Canadian on September 14, 2024 and sell it today you would earn a total of  47.00  from holding Guardian Ultra Short Canadian or generate 0.95% return on investment over 90 days.

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

BetaPro SPTSX Capped  vs.  Guardian Ultra Short Canadian

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.

Guardian Ultra Short

Risk-Adjusted Performance

59 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Ultra Short Canadian are ranked lower than 59 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Guardian Ultra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BetaPro SPTSX and Guardian Ultra

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

The idea behind BetaPro SPTSX Capped and Guardian Ultra Short Canadian 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 Global Correlations module to find global opportunities by holding instruments from different markets.