Correlation Between AdvisorShares STAR and AdvisorShares
Can any of the company-specific risk be diversified away by investing in both AdvisorShares STAR 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 STAR and AdvisorShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvisorShares STAR Global and AdvisorShares, you can compare the effects of market volatilities on AdvisorShares STAR 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 STAR with a short position of AdvisorShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares STAR and AdvisorShares.
Diversification Opportunities for AdvisorShares STAR and AdvisorShares
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AdvisorShares and AdvisorShares is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares STAR Global and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and AdvisorShares STAR 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 STAR Global 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 STAR i.e., AdvisorShares STAR and AdvisorShares go up and down completely randomly.
Pair Corralation between AdvisorShares STAR and AdvisorShares
Given the investment horizon of 90 days AdvisorShares STAR Global is expected to generate 2.51 times more return on investment than AdvisorShares. However, AdvisorShares STAR is 2.51 times more volatile than AdvisorShares. It trades about 0.08 of its potential returns per unit of risk. AdvisorShares is currently generating about 0.07 per unit of risk. If you would invest 3,526 in AdvisorShares STAR Global on November 1, 2024 and sell it today you would earn a total of 900.00 from holding AdvisorShares STAR Global or generate 25.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 22.92% |
| Values | Daily Returns |
AdvisorShares STAR Global vs. AdvisorShares
Performance |
| Timeline |
| AdvisorShares STAR Global |
| AdvisorShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AdvisorShares STAR and AdvisorShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares STAR and AdvisorShares
The main advantage of trading using opposite AdvisorShares STAR and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares STAR 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 STAR vs. AdvisorShares Dorsey Wright | AdvisorShares STAR vs. Vident Core Bond | AdvisorShares STAR vs. WBI BullBear Quality | AdvisorShares STAR vs. WBI BullBear Value |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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