Correlation Between IShares SP and BetaPro Inverse

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

By analyzing existing cross correlation between iShares SP Mid Cap and BetaPro Inverse Bitcoin, you can compare the effects of market volatilities on IShares SP and BetaPro Inverse 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 IShares SP with a short position of BetaPro Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and BetaPro Inverse.

Diversification Opportunities for IShares SP and BetaPro Inverse

-0.88

Correlation Coefficient

IShares SP  BetaPro Inverse

Pay attention - limited upside

The 3 months correlation between IShares and BetaPro is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP Mid Cap and BetaPro Inverse Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Inverse Bitcoin and IShares 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 iShares SP Mid Cap are associated (or correlated) with BetaPro Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Inverse Bitcoin has no effect on the direction of IShares SP i.e., IShares SP and BetaPro Inverse go up and down completely randomly.

Pair Corralation between IShares SP and BetaPro Inverse

Assuming the 90 days trading horizon iShares SP Mid Cap is expected to under-perform the BetaPro Inverse. But the etf apears to be less risky and, when comparing its historical volatility, iShares SP Mid Cap is 3.14 times less risky than BetaPro Inverse. The etf trades about -0.08 of its potential returns per unit of risk. The BetaPro Inverse Bitcoin is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,211  in BetaPro Inverse Bitcoin on December 28, 2024 and sell it today you would earn a total of  88.00  from holding BetaPro Inverse Bitcoin or generate 3.98% return on investment over 90 days.

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

iShares SP Mid Cap  vs.  BetaPro Inverse Bitcoin

iShares SP Mid

Risk-Adjusted Performance

Very Weak

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

BetaPro Inverse Bitcoin

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Inverse Bitcoin are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro Inverse may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares SP and BetaPro Inverse

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

The idea behind iShares SP Mid Cap and BetaPro Inverse Bitcoin 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.