Correlation Between BetaPro SPTSX and Purpose Core

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

Diversification Opportunities for BetaPro SPTSX and Purpose Core

-0.94

Correlation Coefficient

BetaPro SPTSX  Purpose Core

Pay attention - limited upside

The 3 months correlation between BetaPro and Purpose is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SPTSX 60 and Purpose Core Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Core Dividend 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 Purpose Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Core Dividend has no effect on the direction of BetaPro SPTSX i.e., BetaPro SPTSX and Purpose Core go up and down completely randomly.

Pair Corralation between BetaPro SPTSX and Purpose Core

Assuming the 90 days trading horizon BetaPro SPTSX 60 is expected to under-perform the Purpose Core. In addition to that, BetaPro SPTSX is 2.69 times more volatile than Purpose Core Dividend. It trades about -0.38 of its total potential returns per unit of risk. Purpose Core Dividend is currently generating about 0.24 per unit of volatility. If you would invest  3,233  in Purpose Core Dividend on September 4, 2024 and sell it today you would earn a total of  189.00  from holding Purpose Core Dividend or generate 5.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	43.75%
Values	Daily Returns

BetaPro SPTSX 60  vs.  Purpose Core Dividend

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.

Purpose Core Dividend

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Core Dividend are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Purpose Core 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 Purpose Core

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

The idea behind BetaPro SPTSX 60 and Purpose Core 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.