Correlation Between BetaPro Crude and BetaPro SPTSX

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

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

Diversification Opportunities for BetaPro Crude and BetaPro SPTSX

0.55

Correlation Coefficient

BetaPro Crude  BetaPro SPTSX

Very weak diversification

The 3 months correlation between BetaPro and BetaPro is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Crude Oil and BetaPro SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SPTSX Capped and BetaPro Crude 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 Crude Oil are associated (or correlated) with BetaPro SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SPTSX Capped has no effect on the direction of BetaPro Crude i.e., BetaPro Crude and BetaPro SPTSX go up and down completely randomly.

Pair Corralation between BetaPro Crude and BetaPro SPTSX

Assuming the 90 days trading horizon BetaPro Crude is expected to generate 1.69 times less return on investment than BetaPro SPTSX. In addition to that, BetaPro Crude is 4.12 times more volatile than BetaPro SPTSX Capped. It trades about 0.07 of its total potential returns per unit of risk. BetaPro SPTSX Capped is currently generating about 0.5 per unit of volatility. If you would invest  2,739  in BetaPro SPTSX Capped on April 20, 2025 and sell it today you would earn a total of  1,114  from holding BetaPro SPTSX Capped or generate 40.67% return on investment over 90 days.

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

BetaPro Crude Oil  vs.  BetaPro SPTSX Capped

BetaPro Crude Oil

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Crude Oil are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro Crude displayed solid returns over the last few months and may actually be approaching a breakup point.

BetaPro SPTSX Capped

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro SPTSX Capped are ranked lower than 39 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro SPTSX displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaPro Crude and BetaPro SPTSX

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

The idea behind BetaPro Crude Oil and BetaPro SPTSX Capped 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.