Correlation Between BetaPro Equal and BetaPro SP

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

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

Diversification Opportunities for BetaPro Equal and BetaPro SP

0.72

Correlation Coefficient

BetaPro Equal  BetaPro SP

Poor diversification

The 3 months correlation between BetaPro and BetaPro is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro Equal Weight and BetaPro SP TSX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro SP TSX and BetaPro Equal 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 Equal Weight are associated (or correlated) with BetaPro SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro SP TSX has no effect on the direction of BetaPro Equal i.e., BetaPro Equal and BetaPro SP go up and down completely randomly.

Pair Corralation between BetaPro Equal and BetaPro SP

Assuming the 90 days trading horizon BetaPro Equal is expected to generate 1.31 times less return on investment than BetaPro SP. In addition to that, BetaPro Equal is 1.23 times more volatile than BetaPro SP TSX. It trades about 0.23 of its total potential returns per unit of risk. BetaPro SP TSX is currently generating about 0.36 per unit of volatility. If you would invest  2,376  in BetaPro SP TSX on March 22, 2025 and sell it today you would earn a total of  484.00  from holding BetaPro SP TSX or generate 20.37% return on investment over 90 days.

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

BetaPro Equal Weight  vs.  BetaPro SP TSX

BetaPro Equal Weight

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro Equal Weight are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro Equal may actually be approaching a critical reversion point that can send shares even higher in July 2025.

BetaPro SP TSX

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro SP TSX are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro SP may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with BetaPro Equal and BetaPro SP

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

The idea behind BetaPro Equal Weight and BetaPro SP TSX 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.