Correlation Between AdvisorShares STAR and Global X
Can any of the company-specific risk be diversified away by investing in both AdvisorShares STAR and Global X 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 Global X 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 Global X SP, you can compare the effects of market volatilities on AdvisorShares STAR and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares STAR and Global X.
Diversification Opportunities for AdvisorShares STAR and Global X
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AdvisorShares and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares STAR Global and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SP has no effect on the direction of AdvisorShares STAR i.e., AdvisorShares STAR and Global X go up and down completely randomly.
Pair Corralation between AdvisorShares STAR and Global X
Given the investment horizon of 90 days AdvisorShares STAR is expected to generate 1.38 times less return on investment than Global X. But when comparing it to its historical volatility, AdvisorShares STAR Global is 1.0 times less risky than Global X. It trades about 0.09 of its potential returns per unit of risk. Global X SP is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,312 in Global X SP on August 30, 2024 and sell it today you would earn a total of 990.00 from holding Global X SP or generate 42.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvisorShares STAR Global vs. Global X SP
Performance |
| Timeline |
| AdvisorShares STAR Global |
| Global X SP |
AdvisorShares STAR and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares STAR and Global X
The main advantage of trading using opposite AdvisorShares STAR and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares STAR position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's 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 |
| Global X vs. Global X Nasdaq | Global X vs. Global X SP | Global X vs. Global X Russell | Global X vs. Global X SP |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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