Correlation Between BetaShares Global and Vanguard Australian

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

By analyzing existing cross correlation between BetaShares Global Banks and Vanguard Australian Property, you can compare the effects of market volatilities on BetaShares Global and Vanguard Australian 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 Global with a short position of Vanguard Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Global and Vanguard Australian.

Diversification Opportunities for BetaShares Global and Vanguard Australian

-0.43

Correlation Coefficient

BetaShares Global  Vanguard Australian

Very good diversification

The 3 months correlation between BetaShares and Vanguard is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Global Banks and Vanguard Australian Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Australian and BetaShares Global 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 Global Banks are associated (or correlated) with Vanguard Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Australian has no effect on the direction of BetaShares Global i.e., BetaShares Global and Vanguard Australian go up and down completely randomly.

Pair Corralation between BetaShares Global and Vanguard Australian

If you would invest  722.00  in BetaShares Global Banks on September 15, 2024 and sell it today you would earn a total of  141.00  from holding BetaShares Global Banks or generate 19.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

BetaShares Global Banks  vs.  Vanguard Australian Property

BetaShares Global Banks

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Global Banks are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vanguard Australian

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BetaShares Global and Vanguard Australian

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

The idea behind BetaShares Global Banks and Vanguard Australian Property 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.