Correlation Between BetaShares Managed and BetaShares Climate

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

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

Diversification Opportunities for BetaShares Managed and BetaShares Climate

0.37

Correlation Coefficient

BetaShares Managed  BetaShares Climate

Weak diversification

The 3 months correlation between BetaShares and BetaShares is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Managed Risk and BetaShares Climate Change in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Climate Change and BetaShares Managed 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 Managed Risk are associated (or correlated) with BetaShares Climate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Climate Change has no effect on the direction of BetaShares Managed i.e., BetaShares Managed and BetaShares Climate go up and down completely randomly.

Pair Corralation between BetaShares Managed and BetaShares Climate

Assuming the 90 days trading horizon BetaShares Managed Risk is expected to generate 0.64 times more return on investment than BetaShares Climate. However, BetaShares Managed Risk is 1.57 times less risky than BetaShares Climate. It trades about 0.25 of its potential returns per unit of risk. BetaShares Climate Change is currently generating about 0.09 per unit of risk. If you would invest  1,883  in BetaShares Managed Risk on September 14, 2024 and sell it today you would earn a total of  201.00  from holding BetaShares Managed Risk or generate 10.67% return on investment over 90 days.

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

BetaShares Managed Risk  vs.  BetaShares Climate Change

BetaShares Managed Risk

Risk-Adjusted Performance

19 of 100

Solid

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

BetaShares Climate Change

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Climate Change are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BetaShares Climate 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 Managed and BetaShares Climate

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

The idea behind BetaShares Managed Risk and BetaShares Climate Change 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.