Correlation Between SPDR Kensho and AdvisorShares Pure

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Can any of the company-specific risk be diversified away by investing in both SPDR Kensho and AdvisorShares Pure 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 Kensho and AdvisorShares Pure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Kensho New and AdvisorShares Pure Cannabis, you can compare the effects of market volatilities on SPDR Kensho and AdvisorShares Pure 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 Kensho with a short position of AdvisorShares Pure. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Kensho and AdvisorShares Pure.

Diversification Opportunities for SPDR Kensho and AdvisorShares Pure

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SPDR and AdvisorShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho New and AdvisorShares Pure Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Pure and SPDR Kensho 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 Kensho New are associated (or correlated) with AdvisorShares Pure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Pure has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and AdvisorShares Pure go up and down completely randomly.

Pair Corralation between SPDR Kensho and AdvisorShares Pure

Given the investment horizon of 90 days SPDR Kensho New is expected to generate 0.17 times more return on investment than AdvisorShares Pure. However, SPDR Kensho New is 5.94 times less risky than AdvisorShares Pure. It trades about 0.2 of its potential returns per unit of risk. AdvisorShares Pure Cannabis is currently generating about -0.19 per unit of risk. If you would invest  5,038  in SPDR Kensho New on August 29, 2024 and sell it today you would earn a total of  339.00  from holding SPDR Kensho New or generate 6.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SPDR Kensho New  vs.  AdvisorShares Pure Cannabis

 Performance 
       Timeline  
SPDR Kensho New 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho New are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, SPDR Kensho may actually be approaching a critical reversion point that can send shares even higher in December 2024.
AdvisorShares Pure 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AdvisorShares Pure Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

SPDR Kensho and AdvisorShares Pure Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR Kensho and AdvisorShares Pure

The main advantage of trading using opposite SPDR Kensho and AdvisorShares Pure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho position performs unexpectedly, AdvisorShares Pure 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 Pure will offset losses from the drop in AdvisorShares Pure's long position.
The idea behind SPDR Kensho New and AdvisorShares Pure Cannabis 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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