Short Assets Without The Risk
Uncover correlations between assets to bet against certain assets or diversify your portfolio.
Bet against a stock
Find an investment alternative
Diversify your portfolio
Wondering how to invest?
Have you ever wanted to invest against a stock but shied away from short positions and put options?
Do you want to participate in the rising oil price without putting a barrel of oil in your home?
Do you feel you should diversify your portfolio, but you don't know which stocks to add?
Correlations To The Rescue!
How you can use correlations to your advantage.
A correlation describes a relationship between two values. A typical example is the correlation between the oil price and the share price of a gasoline manufacturer.
Correlations can be used in practice to find predictable relationships between different securities. To stay with the oil price example: For example, an investor who expects the price of oil to rise might buy Tesla stock because there is an anti-correlation between Tesla and the price of oil. Conversely, she might buy Honda shares because of the positive correlation if she predicts a falling oil price.
How can correlations be used in investing?
Correlations can be used to:
- Reduce the risk of a portfolio and ensure that assets are not overly correlated.
- Find an alternative to hard-to-trade assets. For example, it is difficult for a retail investor to trade oil. Therefore, it may make sense to look for investments that strongly correlate with the oil price.
- To bet against the price of a security with a negative correlation. If you think a certain stock is overvalued, you can search for stocks with a negative correlation and invest in them, thus creating an implicit short position. This method is much less risky than typical methods such as shorts and put options – which can result in a loss of over 100%.
How It Works
Betag helps you to find interesting relationships between securities.
Search for the title whose correlations you want to know.
Look for the matching correlations for this title.
Check if the correlations makes logical sense.
Invest with the information you have found out.
Frequently Asked Questions
We calculate the correlations between 2 securities on the daily adjusted returns of the last 20 years. If one of the two securities has not been on the market for so long, we use all available returns to calculate the correlation.
We recalculate all correlations about every fortnite.