Correlation Between BetaShares Diversified and BetaShares Global

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

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

Diversification Opportunities for BetaShares Diversified and BetaShares Global

-0.68

Correlation Coefficient

BetaShares Diversified  BetaShares Global

Excellent diversification

The 3 months correlation between BetaShares and BetaShares is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Diversified High and BetaShares Global Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Global and BetaShares Diversified 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 Diversified High are associated (or correlated) with BetaShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Global has no effect on the direction of BetaShares Diversified i.e., BetaShares Diversified and BetaShares Global go up and down completely randomly.

Pair Corralation between BetaShares Diversified and BetaShares Global

Assuming the 90 days trading horizon BetaShares Diversified High is expected to generate 0.66 times more return on investment than BetaShares Global. However, BetaShares Diversified High is 1.51 times less risky than BetaShares Global. It trades about 0.25 of its potential returns per unit of risk. BetaShares Global Government is currently generating about -0.15 per unit of risk. If you would invest  3,403  in BetaShares Diversified High on September 13, 2024 and sell it today you would earn a total of  284.00  from holding BetaShares Diversified High or generate 8.35% return on investment over 90 days.

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

BetaShares Diversified High  vs.  BetaShares Global Government

BetaShares Diversified

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Diversified High are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Diversified may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BetaShares Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaShares Global Government 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 Diversified and BetaShares Global

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

The idea behind BetaShares Diversified High and BetaShares Global Government 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.