Correlation Between ProShares and AdvisorShares STAR
Can any of the company-specific risk be diversified away by investing in both ProShares and AdvisorShares STAR 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 ProShares and AdvisorShares STAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares SP MidCap and AdvisorShares STAR Global, you can compare the effects of market volatilities on ProShares and AdvisorShares STAR 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 ProShares with a short position of AdvisorShares STAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and AdvisorShares STAR.
Diversification Opportunities for ProShares and AdvisorShares STAR
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and AdvisorShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP MidCap and AdvisorShares STAR Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares STAR Global and ProShares 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 ProShares SP MidCap are associated (or correlated) with AdvisorShares STAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares STAR Global has no effect on the direction of ProShares i.e., ProShares and AdvisorShares STAR go up and down completely randomly.
Pair Corralation between ProShares and AdvisorShares STAR
Given the investment horizon of 90 days ProShares SP MidCap is expected to generate 2.03 times more return on investment than AdvisorShares STAR. However, ProShares is 2.03 times more volatile than AdvisorShares STAR Global. It trades about 0.31 of its potential returns per unit of risk. AdvisorShares STAR Global is currently generating about 0.13 per unit of risk. If you would invest 8,132 in ProShares SP MidCap on August 30, 2024 and sell it today you would earn a total of 688.00 from holding ProShares SP MidCap or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP MidCap vs. AdvisorShares STAR Global
Performance |
| Timeline |
| ProShares SP MidCap |
| AdvisorShares STAR Global |
ProShares and AdvisorShares STAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and AdvisorShares STAR
The main advantage of trading using opposite ProShares and AdvisorShares STAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, AdvisorShares STAR 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 STAR will offset losses from the drop in AdvisorShares STAR's long position.| ProShares vs. ProShares Russell 2000 | ProShares vs. ProShares MSCI EAFE | ProShares vs. ProShares MSCI Emerging | ProShares vs. ProShares MSCI Europe |
| AdvisorShares STAR vs. AdvisorShares Dorsey Wright | AdvisorShares STAR vs. Vident Core Bond | AdvisorShares STAR vs. WBI BullBear Quality | AdvisorShares STAR vs. WBI BullBear Value |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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