Correlation Between BetaPro SP and BetaPro SPTSX

Can any of the company-specific risk be diversified away by investing in both BetaPro SP and BetaPro SPTSX 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 BetaPro SPTSX 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 BetaPro SPTSX 60, you can compare the effects of market volatilities on BetaPro SP and BetaPro SPTSX 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 BetaPro SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and BetaPro SPTSX.

Diversification Opportunities for BetaPro SP and BetaPro SPTSX

-0.96

Correlation Coefficient

BetaPro SP  BetaPro SPTSX

Pay attention - limited upside

The 3 months correlation between BetaPro and BetaPro is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 and BetaPro SPTSX 60 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SPTSX 60 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 BetaPro SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SPTSX 60 has no effect on the direction of BetaPro SP i.e., BetaPro SP and BetaPro SPTSX go up and down completely randomly.

Pair Corralation between BetaPro SP and BetaPro SPTSX

Assuming the 90 days trading horizon BetaPro SP 500 is expected to generate 1.39 times more return on investment than BetaPro SPTSX. However, BetaPro SP is 1.39 times more volatile than BetaPro SPTSX 60. It trades about 0.18 of its potential returns per unit of risk. BetaPro SPTSX 60 is currently generating about -0.31 per unit of risk. If you would invest  2,317  in BetaPro SP 500 on September 3, 2024 and sell it today you would earn a total of  397.00  from holding BetaPro SP 500 or generate 17.13% 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.  BetaPro SPTSX 60

BetaPro SP 500

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro SP 500 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro SP displayed solid returns over the last few months and may actually be approaching a breakup point.

BetaPro SPTSX 60

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Etf's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with BetaPro SP and BetaPro SPTSX

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

The idea behind BetaPro SP 500 and BetaPro SPTSX 60 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.