Correlation Between BetaPro Canadian and Purpose Floating

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

By analyzing existing cross correlation between BetaPro Canadian Gold and Purpose Floating Rate, you can compare the effects of market volatilities on BetaPro Canadian and Purpose Floating 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 BetaPro Canadian with a short position of Purpose Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro Canadian and Purpose Floating.

Diversification Opportunities for BetaPro Canadian and Purpose Floating

-0.5

Correlation Coefficient

BetaPro Canadian  Purpose Floating

Very good diversification

The 3 months correlation between BetaPro and Purpose is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Canadian Gold and Purpose Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Floating Rate and BetaPro Canadian 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 BetaPro Canadian Gold are associated (or correlated) with Purpose Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Floating Rate has no effect on the direction of BetaPro Canadian i.e., BetaPro Canadian and Purpose Floating go up and down completely randomly.

Pair Corralation between BetaPro Canadian and Purpose Floating

Assuming the 90 days trading horizon BetaPro Canadian Gold is expected to generate 4.73 times more return on investment than Purpose Floating. However, BetaPro Canadian is 4.73 times more volatile than Purpose Floating Rate. It trades about 0.08 of its potential returns per unit of risk. Purpose Floating Rate is currently generating about 0.04 per unit of risk. If you would invest  1,192  in BetaPro Canadian Gold on September 12, 2024 and sell it today you would earn a total of  1,273  from holding BetaPro Canadian Gold or generate 106.8% return on investment over 90 days.

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

BetaPro Canadian Gold  vs.  Purpose Floating Rate

BetaPro Canadian Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Canadian Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BetaPro Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Purpose Floating Rate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Floating Rate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Purpose Floating is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BetaPro Canadian and Purpose Floating

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

The idea behind BetaPro Canadian Gold and Purpose Floating Rate 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..