Correlation Between Betashares Inflation and Betashares Equities

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

By analyzing existing cross correlation between Betashares Inflation Protected Treasury and Betashares Equities Strong, you can compare the effects of market volatilities on Betashares Inflation and Betashares Equities 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 Betashares Inflation with a short position of Betashares Equities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Betashares Inflation and Betashares Equities.

Diversification Opportunities for Betashares Inflation and Betashares Equities

-0.67

Correlation Coefficient

Betashares Inflation  Betashares Equities

Excellent diversification

The 3 months correlation between Betashares and Betashares is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Betashares Inflation Protected and Betashares Equities Strong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Equities and Betashares Inflation 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 Betashares Inflation Protected Treasury are associated (or correlated) with Betashares Equities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Equities has no effect on the direction of Betashares Inflation i.e., Betashares Inflation and Betashares Equities go up and down completely randomly.

Pair Corralation between Betashares Inflation and Betashares Equities

Assuming the 90 days trading horizon Betashares Inflation is expected to generate 5.98 times less return on investment than Betashares Equities. But when comparing it to its historical volatility, Betashares Inflation Protected Treasury is 7.38 times less risky than Betashares Equities. It trades about 0.06 of its potential returns per unit of risk. Betashares Equities Strong is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  419.00  in Betashares Equities Strong on November 29, 2024 and sell it today you would earn a total of  19.00  from holding Betashares Equities Strong or generate 4.53% return on investment over 90 days.

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

Betashares Inflation Protected  vs.  Betashares Equities Strong

Betashares Inflation

Risk-Adjusted Performance

Insignificant

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

Betashares Equities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Betashares Equities Strong are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Betashares Equities 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 Betashares Inflation and Betashares Equities

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

The idea behind Betashares Inflation Protected Treasury and Betashares Equities Strong 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.