Correlation Between AdvisorShares Hotel and AdvisorShares
Can any of the company-specific risk be diversified away by investing in both AdvisorShares Hotel and AdvisorShares 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 AdvisorShares Hotel and AdvisorShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvisorShares Hotel ETF and AdvisorShares, you can compare the effects of market volatilities on AdvisorShares Hotel and AdvisorShares 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 AdvisorShares Hotel with a short position of AdvisorShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Hotel and AdvisorShares.
Diversification Opportunities for AdvisorShares Hotel and AdvisorShares
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AdvisorShares and AdvisorShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Hotel ETF and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and AdvisorShares Hotel 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 AdvisorShares Hotel ETF are associated (or correlated) with AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of AdvisorShares Hotel i.e., AdvisorShares Hotel and AdvisorShares go up and down completely randomly.
Pair Corralation between AdvisorShares Hotel and AdvisorShares
Given the investment horizon of 90 days AdvisorShares Hotel is expected to generate 1.11 times less return on investment than AdvisorShares. In addition to that, AdvisorShares Hotel is 1.33 times more volatile than AdvisorShares. It trades about 0.08 of its total potential returns per unit of risk. AdvisorShares is currently generating about 0.11 per unit of volatility. If you would invest 2,377 in AdvisorShares on September 2, 2024 and sell it today you would earn a total of 66.00 from holding AdvisorShares or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 8.06% |
| Values | Daily Returns |
AdvisorShares Hotel ETF vs. AdvisorShares
Performance |
| Timeline |
| AdvisorShares Hotel ETF |
| AdvisorShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AdvisorShares Hotel and AdvisorShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares Hotel and AdvisorShares
The main advantage of trading using opposite AdvisorShares Hotel and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Hotel position performs unexpectedly, AdvisorShares 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 AdvisorShares will offset losses from the drop in AdvisorShares' long position.| AdvisorShares Hotel vs. AdvisorShares Restaurant ETF | AdvisorShares Hotel vs. Defiance Hotel Airline | AdvisorShares Hotel vs. Direxion Daily Travel | AdvisorShares Hotel vs. Amplify ETF Trust |
| AdvisorShares vs. First Trust Managed | AdvisorShares vs. IQ Hedge Multi Strategy | AdvisorShares vs. First Trust BuyWrite | AdvisorShares vs. SPDR SSgA Global |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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