Correlation Between SPDR SP and AdvisorShares Focused

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

Diversification Opportunities for SPDR SP and AdvisorShares Focused

SPDRAdvisorSharesDiversified AwaySPDRAdvisorSharesDiversified Away100%
0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between SPDR and AdvisorShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and AdvisorShares Focused Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Focused and SPDR SP 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 SP MIDCAP are associated (or correlated) with AdvisorShares Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Focused has no effect on the direction of SPDR SP i.e., SPDR SP and AdvisorShares Focused go up and down completely randomly.

Pair Corralation between SPDR SP and AdvisorShares Focused

Considering the 90-day investment horizon SPDR SP is expected to generate 1.02 times less return on investment than AdvisorShares Focused. In addition to that, SPDR SP is 1.34 times more volatile than AdvisorShares Focused Equity. It trades about 0.04 of its total potential returns per unit of risk. AdvisorShares Focused Equity is currently generating about 0.05 per unit of volatility. If you would invest  6,112  in AdvisorShares Focused Equity on November 24, 2024 and sell it today you would earn a total of  504.00  from holding AdvisorShares Focused Equity or generate 8.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

SPDR SP MIDCAP  vs.  AdvisorShares Focused Equity

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50510
JavaScript chart by amCharts 3.21.15MDY CWS
       Timeline  
SPDR SP MIDCAP 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days SPDR SP MIDCAP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb560570580590600610620
AdvisorShares Focused 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days AdvisorShares Focused Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6465666768697071

SPDR SP and AdvisorShares Focused Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.59-1.21-0.83-0.45-0.080.160.540.921.31.68 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.15MDY CWS
       Returns  

Pair Trading with SPDR SP and AdvisorShares Focused

The main advantage of trading using opposite SPDR SP and AdvisorShares Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, AdvisorShares Focused 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 Focused will offset losses from the drop in AdvisorShares Focused's long position.
The idea behind SPDR SP MIDCAP and AdvisorShares Focused Equity 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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