Correlation Between BetaShares Australian and BetaShares Australia

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

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

Diversification Opportunities for BetaShares Australian and BetaShares Australia

0.11

Correlation Coefficient

BetaShares Australian  BetaShares Australia

Average diversification

The 3 months correlation between BetaShares and BetaShares is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Australian Investme and BetaShares Australia 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Australia 200 and BetaShares Australian 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 Australian Investment are associated (or correlated) with BetaShares Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Australia 200 has no effect on the direction of BetaShares Australian i.e., BetaShares Australian and BetaShares Australia go up and down completely randomly.

Pair Corralation between BetaShares Australian and BetaShares Australia

Assuming the 90 days trading horizon BetaShares Australian is expected to generate 1.76 times less return on investment than BetaShares Australia. But when comparing it to its historical volatility, BetaShares Australian Investment is 1.92 times less risky than BetaShares Australia. It trades about 0.08 of its potential returns per unit of risk. BetaShares Australia 200 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  11,490  in BetaShares Australia 200 on September 14, 2024 and sell it today you would earn a total of  2,484  from holding BetaShares Australia 200 or generate 21.62% return on investment over 90 days.

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

BetaShares Australian Investme  vs.  BetaShares Australia 200

BetaShares Australian

Risk-Adjusted Performance

0 of 100

Very Weak

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

BetaShares Australia 200

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Australia 200 are ranked lower than 6 (%) 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.

Pair Trading with BetaShares Australian and BetaShares Australia

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

The idea behind BetaShares Australian Investment and BetaShares Australia 200 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.