Correlation Between BetaPro SP and Evolve Canadian

Can any of the company-specific risk be diversified away by investing in both BetaPro SP 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 SP 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 SP 500 and Evolve Canadian Banks, you can compare the effects of market volatilities on BetaPro SP 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 SP with a short position of Evolve Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and Evolve Canadian.

Diversification Opportunities for BetaPro SP and Evolve Canadian

-0.94

Correlation Coefficient

BetaPro SP  Evolve Canadian

Pay attention - limited upside

The 3 months correlation between BetaPro and Evolve is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 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 SP 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 SP 500 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 SP i.e., BetaPro SP and Evolve Canadian go up and down completely randomly.

Pair Corralation between BetaPro SP and Evolve Canadian

Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the Evolve Canadian. In addition to that, BetaPro SP is 1.25 times more volatile than Evolve Canadian Banks. It trades about -0.15 of its total potential returns per unit of risk. Evolve Canadian Banks is currently generating about 0.33 per unit of volatility. If you would invest  741.00  in Evolve Canadian Banks on September 12, 2024 and sell it today you would earn a total of  86.00  from holding Evolve Canadian Banks or generate 11.61% return on investment over 90 days.

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

BetaPro SP 500  vs.  Evolve Canadian Banks

BetaPro SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic 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

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Canadian Banks are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very weak 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 SP and Evolve Canadian

The main advantage of trading using opposite BetaPro SP and Evolve Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP 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 SP 500 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.