Correlation Between BetaShares Geared and Vanguard MSCI

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

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

Diversification Opportunities for BetaShares Geared and Vanguard MSCI

0.49

Correlation Coefficient

BetaShares Geared  Vanguard MSCI

Very weak diversification

The 3 months correlation between BetaShares and Vanguard is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Geared Australian and Vanguard MSCI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard MSCI Intern and BetaShares Geared 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 Geared Australian are associated (or correlated) with Vanguard MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard MSCI Intern has no effect on the direction of BetaShares Geared i.e., BetaShares Geared and Vanguard MSCI go up and down completely randomly.

Pair Corralation between BetaShares Geared and Vanguard MSCI

Assuming the 90 days trading horizon BetaShares Geared Australian is expected to under-perform the Vanguard MSCI. In addition to that, BetaShares Geared is 2.3 times more volatile than Vanguard MSCI International. It trades about 0.0 of its total potential returns per unit of risk. Vanguard MSCI International is currently generating about 0.27 per unit of volatility. If you would invest  12,633  in Vanguard MSCI International on September 27, 2024 and sell it today you would earn a total of  1,478  from holding Vanguard MSCI International or generate 11.7% return on investment over 90 days.

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

BetaShares Geared Australian  vs.  Vanguard MSCI International

BetaShares Geared

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vanguard MSCI Intern

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard MSCI International are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vanguard MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BetaShares Geared and Vanguard MSCI

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

The idea behind BetaShares Geared Australian and Vanguard MSCI International 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.