Correlation Between BetaPro Silver and BetaPro Gold

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

By analyzing existing cross correlation between BetaPro Silver 2x and BetaPro Gold Bullion, you can compare the effects of market volatilities on BetaPro Silver and BetaPro Gold 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 Silver with a short position of BetaPro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Silver and BetaPro Gold.

Diversification Opportunities for BetaPro Silver and BetaPro Gold

0.12

Correlation Coefficient

BetaPro Silver  BetaPro Gold

Average diversification

The 3 months correlation between BetaPro and BetaPro is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Silver 2x and BetaPro Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Gold Bullion and BetaPro Silver 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 Silver 2x are associated (or correlated) with BetaPro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Gold Bullion has no effect on the direction of BetaPro Silver i.e., BetaPro Silver and BetaPro Gold go up and down completely randomly.

Pair Corralation between BetaPro Silver and BetaPro Gold

Assuming the 90 days trading horizon BetaPro Silver 2x is expected to under-perform the BetaPro Gold. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro Silver 2x is 9.35 times less risky than BetaPro Gold. The etf trades about -0.07 of its potential returns per unit of risk. The BetaPro Gold Bullion is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  728.00  in BetaPro Gold Bullion on September 3, 2024 and sell it today you would earn a total of  1,880  from holding BetaPro Gold Bullion or generate 258.24% return on investment over 90 days.

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

BetaPro Silver 2x  vs.  BetaPro Gold Bullion

BetaPro Silver 2x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro Silver 2x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

BetaPro Gold Bullion

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Gold Bullion are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, BetaPro Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaPro Silver and BetaPro Gold

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

The idea behind BetaPro Silver 2x and BetaPro Gold Bullion 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.