Correlation Between Purpose Multi and BetaPro SP

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

By analyzing existing cross correlation between Purpose Multi Strategy Market and BetaPro SP TSX, you can compare the effects of market volatilities on Purpose Multi and BetaPro SP 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 Purpose Multi with a short position of BetaPro SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Multi and BetaPro SP.

Diversification Opportunities for Purpose Multi and BetaPro SP

0.52

Correlation Coefficient

Purpose Multi  BetaPro SP

Very weak diversification

The 3 months correlation between Purpose and BetaPro is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Multi Strategy Market and BetaPro SP TSX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SP TSX and Purpose Multi 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 Purpose Multi Strategy Market are associated (or correlated) with BetaPro SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SP TSX has no effect on the direction of Purpose Multi i.e., Purpose Multi and BetaPro SP go up and down completely randomly.

Pair Corralation between Purpose Multi and BetaPro SP

Assuming the 90 days trading horizon Purpose Multi Strategy Market is expected to under-perform the BetaPro SP. But the etf apears to be less risky and, when comparing its historical volatility, Purpose Multi Strategy Market is 4.22 times less risky than BetaPro SP. The etf trades about -0.07 of its potential returns per unit of risk. The BetaPro SP TSX is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,527  in BetaPro SP TSX on December 21, 2024 and sell it today you would earn a total of  172.00  from holding BetaPro SP TSX or generate 6.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Purpose Multi Strategy Market  vs.  BetaPro SP TSX

Purpose Multi Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Purpose Multi Strategy Market has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Purpose Multi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BetaPro SP TSX

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro SP TSX are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro SP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Purpose Multi and BetaPro SP

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

The idea behind Purpose Multi Strategy Market and BetaPro SP TSX 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.