Correlation Between Beta Shares and SPDR SPASX

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

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

Diversification Opportunities for Beta Shares and SPDR SPASX

0.04

Correlation Coefficient

Beta Shares  SPDR SPASX

Significant diversification

The 3 months correlation between Beta and SPDR is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Beta Shares SPASX and SPDR SPASX 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SPASX 200 and Beta Shares 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 Beta Shares SPASX are associated (or correlated) with SPDR SPASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SPASX 200 has no effect on the direction of Beta Shares i.e., Beta Shares and SPDR SPASX go up and down completely randomly.

Pair Corralation between Beta Shares and SPDR SPASX

Assuming the 90 days trading horizon Beta Shares SPASX is expected to generate 0.75 times more return on investment than SPDR SPASX. However, Beta Shares SPASX is 1.33 times less risky than SPDR SPASX. It trades about 0.09 of its potential returns per unit of risk. SPDR SPASX 200 is currently generating about 0.06 per unit of risk. If you would invest  1,129  in Beta Shares SPASX on September 4, 2024 and sell it today you would earn a total of  584.00  from holding Beta Shares SPASX or generate 51.73% return on investment over 90 days.

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

Beta Shares SPASX  vs.  SPDR SPASX 200

Beta Shares SPASX

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beta Shares SPASX are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Beta Shares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SPDR SPASX 200

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SPASX 200 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SPDR SPASX may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Beta Shares and SPDR SPASX

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

The idea behind Beta Shares SPASX and SPDR SPASX 200 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.