Correlation Between BetaPro Natural and BetaPro Canadian

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

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

Diversification Opportunities for BetaPro Natural and BetaPro Canadian

-0.73

Correlation Coefficient

BetaPro Natural  BetaPro Canadian

Pay attention - limited upside

The 3 months correlation between BetaPro and BetaPro is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Natural Gas and BetaPro Canadian Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Canadian Gold and BetaPro Natural 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 Natural Gas are associated (or correlated) with BetaPro Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Canadian Gold has no effect on the direction of BetaPro Natural i.e., BetaPro Natural and BetaPro Canadian go up and down completely randomly.

Pair Corralation between BetaPro Natural and BetaPro Canadian

Assuming the 90 days trading horizon BetaPro Natural Gas is expected to under-perform the BetaPro Canadian. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro Natural Gas is 10.71 times less risky than BetaPro Canadian. The etf trades about -0.11 of its potential returns per unit of risk. The BetaPro Canadian Gold is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  277.00  in BetaPro Canadian Gold on September 3, 2024 and sell it today you would earn a total of  2,476  from holding BetaPro Canadian Gold or generate 893.86% return on investment over 90 days.

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

BetaPro Natural Gas  vs.  BetaPro Canadian Gold

BetaPro Natural Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

BetaPro Canadian Gold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Canadian Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, BetaPro Canadian displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaPro Natural and BetaPro Canadian

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

The idea behind BetaPro Natural Gas and BetaPro Canadian Gold 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.