Correlation Between BetaShares Crude and BetaShares Legg

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

By analyzing existing cross correlation between BetaShares Crude Oil and BetaShares Legg Mason, you can compare the effects of market volatilities on BetaShares Crude and BetaShares Legg 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 BetaShares Crude with a short position of BetaShares Legg. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Crude and BetaShares Legg.

Diversification Opportunities for BetaShares Crude and BetaShares Legg

-0.07

Correlation Coefficient

BetaShares Crude  BetaShares Legg

Good diversification

The 3 months correlation between BetaShares and BetaShares is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Crude Oil and BetaShares Legg Mason in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Legg Mason and BetaShares Crude 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 BetaShares Crude Oil are associated (or correlated) with BetaShares Legg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Legg Mason has no effect on the direction of BetaShares Crude i.e., BetaShares Crude and BetaShares Legg go up and down completely randomly.

Pair Corralation between BetaShares Crude and BetaShares Legg

Assuming the 90 days trading horizon BetaShares Crude is expected to generate 716.22 times less return on investment than BetaShares Legg. But when comparing it to its historical volatility, BetaShares Crude Oil is 59.73 times less risky than BetaShares Legg. It trades about 0.01 of its potential returns per unit of risk. BetaShares Legg Mason is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  868.00  in BetaShares Legg Mason on September 4, 2024 and sell it today you would earn a total of  7,861  from holding BetaShares Legg Mason or generate 905.65% return on investment over 90 days.

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

BetaShares Crude Oil  vs.  BetaShares Legg Mason

BetaShares Crude Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaShares Crude Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BetaShares Crude is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BetaShares Legg Mason

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Legg Mason are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Legg unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaShares Crude and BetaShares Legg

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

The idea behind BetaShares Crude Oil and BetaShares Legg Mason 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.