Correlation Between BetaPro SP and IShares High

Can any of the company-specific risk be diversified away by investing in both BetaPro SP and IShares High 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 IShares High 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 iShares High Dividend, you can compare the effects of market volatilities on BetaPro SP and IShares High 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 IShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and IShares High.

Diversification Opportunities for BetaPro SP and IShares High

-0.73

Correlation Coefficient

BetaPro SP  IShares High

Pay attention - limited upside

The 3 months correlation between BetaPro and IShares is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and iShares High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares High Dividend 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 IShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares High Dividend has no effect on the direction of BetaPro SP i.e., BetaPro SP and IShares High go up and down completely randomly.

Pair Corralation between BetaPro SP and IShares High

Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the IShares High. In addition to that, BetaPro SP is 1.18 times more volatile than iShares High Dividend. It trades about -0.09 of its total potential returns per unit of risk. iShares High Dividend is currently generating about 0.05 per unit of volatility. If you would invest  2,929  in iShares High Dividend on September 12, 2024 and sell it today you would earn a total of  523.00  from holding iShares High Dividend or generate 17.86% return on investment over 90 days.

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

BetaPro SP 500  vs.  iShares High Dividend

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.

iShares High Dividend

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares High Dividend are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, IShares High 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 SP and IShares High

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

The idea behind BetaPro SP 500 and iShares High Dividend 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.