Correlation Between BetaShares Crypto and BetaShares Australia

Can any of the company-specific risk be diversified away by investing in both BetaShares Crypto 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 Crypto 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 Crypto Innovators and BetaShares Australia 200, you can compare the effects of market volatilities on BetaShares Crypto 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 Crypto with a short position of BetaShares Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Crypto and BetaShares Australia.

Diversification Opportunities for BetaShares Crypto and BetaShares Australia

0.67

Correlation Coefficient

BetaShares Crypto  BetaShares Australia

Poor diversification

The 3 months correlation between BetaShares and BetaShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Crypto Innovators 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 Crypto 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 Crypto Innovators 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 Crypto i.e., BetaShares Crypto and BetaShares Australia go up and down completely randomly.

Pair Corralation between BetaShares Crypto and BetaShares Australia

Assuming the 90 days trading horizon BetaShares Crypto Innovators is expected to generate 7.19 times more return on investment than BetaShares Australia. However, BetaShares Crypto is 7.19 times more volatile than BetaShares Australia 200. It trades about 0.18 of its potential returns per unit of risk. BetaShares Australia 200 is currently generating about 0.04 per unit of risk. If you would invest  474.00  in BetaShares Crypto Innovators on September 25, 2024 and sell it today you would earn a total of  279.00  from holding BetaShares Crypto Innovators or generate 58.86% return on investment over 90 days.

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

BetaShares Crypto Innovators  vs.  BetaShares Australia 200

BetaShares Crypto

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Crypto Innovators are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Crypto unveiled solid returns over the last few months and may actually be approaching a breakup point.

BetaShares Australia 200

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Australia 200 are ranked lower than 2 (%) 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 Crypto and BetaShares Australia

The main advantage of trading using opposite BetaShares Crypto and BetaShares Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaShares Crypto 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 Crypto Innovators 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.