Correlation Between BetaShares Australia and SPDR SP

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

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

Diversification Opportunities for BetaShares Australia and SPDR SP

0.63

Correlation Coefficient

BetaShares Australia  SPDR SP

Poor diversification

The 3 months correlation between BetaShares and SPDR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Australia 200 and SPDR SP World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP World and BetaShares Australia 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 Australia 200 are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP World has no effect on the direction of BetaShares Australia i.e., BetaShares Australia and SPDR SP go up and down completely randomly.

Pair Corralation between BetaShares Australia and SPDR SP

Assuming the 90 days trading horizon BetaShares Australia is expected to generate 18.74 times less return on investment than SPDR SP. In addition to that, BetaShares Australia is 1.07 times more volatile than SPDR SP World. It trades about 0.01 of its total potential returns per unit of risk. SPDR SP World is currently generating about 0.26 per unit of volatility. If you would invest  4,477  in SPDR SP World on September 27, 2024 and sell it today you would earn a total of  451.00  from holding SPDR SP World or generate 10.07% return on investment over 90 days.

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

BetaShares Australia 200  vs.  SPDR SP World

BetaShares Australia 200

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Australia 200 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BetaShares Australia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR SP World

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP World are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BetaShares Australia and SPDR SP

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

The idea behind BetaShares Australia 200 and SPDR SP World 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.