Correlation Between Beta Shares and ISharesGlobal 100

Can any of the company-specific risk be diversified away by investing in both Beta Shares and ISharesGlobal 100 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 ISharesGlobal 100 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 iSharesGlobal 100, you can compare the effects of market volatilities on Beta Shares and ISharesGlobal 100 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 ISharesGlobal 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beta Shares and ISharesGlobal 100.

Diversification Opportunities for Beta Shares and ISharesGlobal 100

0.01

Correlation Coefficient

Beta Shares  ISharesGlobal 100

Significant diversification

The 3 months correlation between Beta and ISharesGlobal is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Beta Shares SPASX and iSharesGlobal 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSharesGlobal 100 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 ISharesGlobal 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSharesGlobal 100 has no effect on the direction of Beta Shares i.e., Beta Shares and ISharesGlobal 100 go up and down completely randomly.

Pair Corralation between Beta Shares and ISharesGlobal 100

Assuming the 90 days trading horizon Beta Shares SPASX is expected to under-perform the ISharesGlobal 100. In addition to that, Beta Shares is 1.38 times more volatile than iSharesGlobal 100. It trades about -0.02 of its total potential returns per unit of risk. iSharesGlobal 100 is currently generating about 0.12 per unit of volatility. If you would invest  15,431  in iSharesGlobal 100 on December 3, 2024 and sell it today you would earn a total of  801.00  from holding iSharesGlobal 100 or generate 5.19% 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.  iSharesGlobal 100

Beta Shares SPASX

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beta Shares SPASX has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

iSharesGlobal 100

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iSharesGlobal 100 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ISharesGlobal 100 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 Beta Shares and ISharesGlobal 100

The main advantage of trading using opposite Beta Shares and ISharesGlobal 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beta Shares position performs unexpectedly, ISharesGlobal 100 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 ISharesGlobal 100 will offset losses from the drop in ISharesGlobal 100's long position.

The idea behind Beta Shares SPASX and iSharesGlobal 100 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.