Correlation Between Consumer Discretionary and AdvisorShares Restaurant
Can any of the company-specific risk be diversified away by investing in both Consumer Discretionary and AdvisorShares Restaurant 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 Consumer Discretionary and AdvisorShares Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Discretionary Select and AdvisorShares Restaurant ETF, you can compare the effects of market volatilities on Consumer Discretionary and AdvisorShares Restaurant 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 Consumer Discretionary with a short position of AdvisorShares Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Discretionary and AdvisorShares Restaurant.
Diversification Opportunities for Consumer Discretionary and AdvisorShares Restaurant
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Consumer and AdvisorShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Discretionary Select and AdvisorShares Restaurant ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Restaurant and Consumer Discretionary 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 Consumer Discretionary Select are associated (or correlated) with AdvisorShares Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Restaurant has no effect on the direction of Consumer Discretionary i.e., Consumer Discretionary and AdvisorShares Restaurant go up and down completely randomly.
Pair Corralation between Consumer Discretionary and AdvisorShares Restaurant
Considering the 90-day investment horizon Consumer Discretionary Select is expected to generate 0.87 times more return on investment than AdvisorShares Restaurant. However, Consumer Discretionary Select is 1.15 times less risky than AdvisorShares Restaurant. It trades about 0.5 of its potential returns per unit of risk. AdvisorShares Restaurant ETF is currently generating about 0.33 per unit of risk. If you would invest 19,940 in Consumer Discretionary Select on September 5, 2024 and sell it today you would earn a total of 2,484 from holding Consumer Discretionary Select or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Consumer Discretionary Select vs. AdvisorShares Restaurant ETF
Performance |
| Timeline |
| Consumer Discretionary |
| AdvisorShares Restaurant |
Consumer Discretionary and AdvisorShares Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Discretionary and AdvisorShares Restaurant
The main advantage of trading using opposite Consumer Discretionary and AdvisorShares Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Discretionary position performs unexpectedly, AdvisorShares Restaurant 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 Restaurant will offset losses from the drop in AdvisorShares Restaurant's long position.| Consumer Discretionary vs. Smith Nephew SNATS | Consumer Discretionary vs. Fresenius Medical Care | Consumer Discretionary vs. Fomento Economico Mexicano | Consumer Discretionary vs. The Cooper Companies, |
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 Stocks Directory module to find actively traded stocks across global markets.
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