Correlation Between SPDR SPASX and BetaShares Australia
Can any of the company-specific risk be diversified away by investing in both SPDR SPASX and BetaShares Australia 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 SPDR SPASX and BetaShares Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SPASX 200 and BetaShares Australia 200, you can compare the effects of market volatilities on SPDR SPASX and BetaShares Australia 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 SPDR SPASX with a short position of BetaShares Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and BetaShares Australia.
Diversification Opportunities for SPDR SPASX and BetaShares Australia
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and BetaShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and BetaShares Australia 200 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Australia 200 and SPDR SPASX 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 SPDR SPASX 200 are associated (or correlated) with BetaShares Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Australia 200 has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and BetaShares Australia go up and down completely randomly.
Pair Corralation between SPDR SPASX and BetaShares Australia
Assuming the 90 days trading horizon SPDR SPASX is expected to generate 1.1 times less return on investment than BetaShares Australia. In addition to that, SPDR SPASX is 1.09 times more volatile than BetaShares Australia 200. It trades about 0.26 of its total potential returns per unit of risk. BetaShares Australia 200 is currently generating about 0.31 per unit of volatility. If you would invest 12,701 in BetaShares Australia 200 on July 7, 2024 and sell it today you would earn a total of 1,010 from holding BetaShares Australia 200 or generate 7.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR SPASX 200 vs. BetaShares Australia 200
Performance |
Timeline |
SPDR SPASX 200 |
BetaShares Australia 200 |
SPDR SPASX and BetaShares Australia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR SPASX and BetaShares Australia
The main advantage of trading using opposite SPDR SPASX and BetaShares Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SPASX position performs unexpectedly, BetaShares Australia 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 Australia will offset losses from the drop in BetaShares Australia's long position.SPDR SPASX vs. Champion Iron | SPDR SPASX vs. Australian Dairy Farms | SPDR SPASX vs. Perpetual Credit Income | SPDR SPASX vs. Greentech Metals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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