Correlation Between AdvisorShares Pure and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both AdvisorShares Pure and SPDR Galaxy 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 Pure and SPDR Galaxy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvisorShares Pure Cannabis and SPDR Galaxy Hedged, you can compare the effects of market volatilities on AdvisorShares Pure and SPDR Galaxy 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 Pure with a short position of SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Pure and SPDR Galaxy.
Diversification Opportunities for AdvisorShares Pure and SPDR Galaxy
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AdvisorShares and SPDR is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Pure Cannabis and SPDR Galaxy Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Hedged and AdvisorShares Pure 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 Pure Cannabis are associated (or correlated) with SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Hedged has no effect on the direction of AdvisorShares Pure i.e., AdvisorShares Pure and SPDR Galaxy go up and down completely randomly.
Pair Corralation between AdvisorShares Pure and SPDR Galaxy
Given the investment horizon of 90 days AdvisorShares Pure Cannabis is expected to under-perform the SPDR Galaxy. In addition to that, AdvisorShares Pure is 1.87 times more volatile than SPDR Galaxy Hedged. It trades about -0.01 of its total potential returns per unit of risk. SPDR Galaxy Hedged is currently generating about 0.28 per unit of volatility. If you would invest 2,525 in SPDR Galaxy Hedged on August 25, 2024 and sell it today you would earn a total of 1,230 from holding SPDR Galaxy Hedged or generate 48.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 24.02% |
| Values | Daily Returns |
AdvisorShares Pure Cannabis vs. SPDR Galaxy Hedged
Performance |
| Timeline |
| AdvisorShares Pure |
| SPDR Galaxy Hedged |
AdvisorShares Pure and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares Pure and SPDR Galaxy
The main advantage of trading using opposite AdvisorShares Pure and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Pure position performs unexpectedly, SPDR Galaxy 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 SPDR Galaxy will offset losses from the drop in SPDR Galaxy's long position.| AdvisorShares Pure vs. SPDR Kensho New | AdvisorShares Pure vs. Global X FinTech | AdvisorShares Pure vs. iShares Genomics Immunology | AdvisorShares Pure vs. Aquagold International |
| SPDR Galaxy vs. SPDR Kensho New | SPDR Galaxy vs. Global X FinTech | SPDR Galaxy vs. iShares Genomics Immunology | SPDR Galaxy vs. Aquagold International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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