Correlation Between BetaPro SPTSX and Global Healthcare

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

By analyzing existing cross correlation between BetaPro SPTSX 60 and Global Healthcare Income, you can compare the effects of market volatilities on BetaPro SPTSX and Global Healthcare 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 Global Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SPTSX and Global Healthcare.

Diversification Opportunities for BetaPro SPTSX and Global Healthcare

-0.29

Correlation Coefficient

BetaPro SPTSX  Global Healthcare

Very good diversification

The 3 months correlation between BetaPro and Global is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX 60 and Global Healthcare Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare Income 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 60 are associated (or correlated) with Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare Income has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and Global Healthcare go up and down completely randomly.

Pair Corralation between BetaPro SPTSX and Global Healthcare

Assuming the 90 days trading horizon BetaPro SPTSX 60 is expected to under-perform the Global Healthcare. In addition to that, BetaPro SPTSX is 1.14 times more volatile than Global Healthcare Income. It trades about -0.03 of its total potential returns per unit of risk. Global Healthcare Income is currently generating about 0.19 per unit of volatility. If you would invest  747.00  in Global Healthcare Income on December 30, 2024 and sell it today you would earn a total of  61.00  from holding Global Healthcare Income or generate 8.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

BetaPro SPTSX 60  vs.  Global Healthcare Income

BetaPro SPTSX 60

Risk-Adjusted Performance

Very Weak

Over the last 90 days BetaPro SPTSX 60 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, BetaPro SPTSX is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global Healthcare Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Healthcare Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Global Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BetaPro SPTSX and Global Healthcare

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

The idea behind BetaPro SPTSX 60 and Global Healthcare Income 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.