Correlation Between SPDR SP and BetaShares Managed

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

By analyzing existing cross correlation between SPDR SP 500 and BetaShares Managed Risk, you can compare the effects of market volatilities on SPDR SP and BetaShares Managed 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 SP with a short position of BetaShares Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and BetaShares Managed.

Diversification Opportunities for SPDR SP and BetaShares Managed

0.89

Correlation Coefficient

SPDR SP  BetaShares Managed

Very poor diversification

The 3 months correlation between SPDR and BetaShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and BetaShares Managed Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Managed Risk and SPDR SP 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 SP 500 are associated (or correlated) with BetaShares Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Managed Risk has no effect on the direction of SPDR SP i.e., SPDR SP and BetaShares Managed go up and down completely randomly.

Pair Corralation between SPDR SP and BetaShares Managed

Assuming the 90 days trading horizon SPDR SP 500 is expected to under-perform the BetaShares Managed. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP 500 is 1.42 times less risky than BetaShares Managed. The etf trades about -0.11 of its potential returns per unit of risk. The BetaShares Managed Risk is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,092  in BetaShares Managed Risk on December 30, 2024 and sell it today you would lose (55.00) from holding BetaShares Managed Risk or give up 2.63% of portfolio value over 90 days.

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

SPDR SP 500  vs.  BetaShares Managed Risk

SPDR SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SPDR SP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BetaShares Managed Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days BetaShares Managed Risk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BetaShares Managed 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 SP and BetaShares Managed

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

The idea behind SPDR SP 500 and BetaShares Managed Risk 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.