Correlation Between SPDR SPASX and Beta Shares

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

By analyzing existing cross correlation between SPDR SPASX 200 and Beta Shares SPASX, you can compare the effects of market volatilities on SPDR SPASX and Beta Shares 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 SPDR SPASX with a short position of Beta Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and Beta Shares.

Diversification Opportunities for SPDR SPASX and Beta Shares

0.93

Correlation Coefficient

SPDR SPASX  Beta Shares

Almost no diversification

The 3 months correlation between SPDR and Beta is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and Beta Shares SPASX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beta Shares SPASX and SPDR SPASX 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 SPDR SPASX 200 are associated (or correlated) with Beta Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beta Shares SPASX has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and Beta Shares go up and down completely randomly.

Pair Corralation between SPDR SPASX and Beta Shares

Assuming the 90 days trading horizon SPDR SPASX is expected to generate 1.09 times less return on investment than Beta Shares. In addition to that, SPDR SPASX is 1.3 times more volatile than Beta Shares SPASX. It trades about 0.04 of its total potential returns per unit of risk. Beta Shares SPASX is currently generating about 0.06 per unit of volatility. If you would invest  670.00  in Beta Shares SPASX on December 28, 2024 and sell it today you would earn a total of  21.00  from holding Beta Shares SPASX or generate 3.13% return on investment over 90 days.

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

SPDR SPASX 200  vs.  Beta Shares SPASX

SPDR SPASX 200

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SPASX 200 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR SPASX is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Beta Shares SPASX

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beta Shares SPASX are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Beta Shares is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR SPASX and Beta Shares

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

The idea behind SPDR SPASX 200 and Beta Shares SPASX 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.