Correlation Between Betashares Asia and BetaShares Solar

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

By analyzing existing cross correlation between Betashares Asia Technology and BetaShares Solar ETF, you can compare the effects of market volatilities on Betashares Asia and BetaShares Solar 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 Asia with a short position of BetaShares Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Betashares Asia and BetaShares Solar.

Diversification Opportunities for Betashares Asia and BetaShares Solar

-0.32

Correlation Coefficient

Betashares Asia  BetaShares Solar

Very good diversification

The 3 months correlation between Betashares and BetaShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Betashares Asia Technology and BetaShares Solar ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Solar ETF and Betashares Asia 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 Asia Technology are associated (or correlated) with BetaShares Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Solar ETF has no effect on the direction of Betashares Asia i.e., Betashares Asia and BetaShares Solar go up and down completely randomly.

Pair Corralation between Betashares Asia and BetaShares Solar

Assuming the 90 days trading horizon Betashares Asia Technology is expected to generate 0.77 times more return on investment than BetaShares Solar. However, Betashares Asia Technology is 1.3 times less risky than BetaShares Solar. It trades about 0.17 of its potential returns per unit of risk. BetaShares Solar ETF is currently generating about -0.07 per unit of risk. If you would invest  876.00  in Betashares Asia Technology on September 20, 2024 and sell it today you would earn a total of  144.00  from holding Betashares Asia Technology or generate 16.44% return on investment over 90 days.

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

Betashares Asia Technology  vs.  BetaShares Solar ETF

Betashares Asia Tech

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Betashares Asia Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Betashares Asia unveiled solid returns over the last few months and may actually be approaching a breakup point.

BetaShares Solar ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaShares Solar ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Betashares Asia and BetaShares Solar

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

The idea behind Betashares Asia Technology and BetaShares Solar ETF 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.