Correlation Between Roundhill Sports and AdvisorShares Hotel

Can any of the company-specific risk be diversified away by investing in both Roundhill Sports and AdvisorShares Hotel 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 Roundhill Sports and AdvisorShares Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Roundhill Sports Betting and AdvisorShares Hotel ETF, you can compare the effects of market volatilities on Roundhill Sports and AdvisorShares Hotel 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 Roundhill Sports with a short position of AdvisorShares Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Sports and AdvisorShares Hotel.

Diversification Opportunities for Roundhill Sports and AdvisorShares Hotel

0.82

Correlation Coefficient

Roundhill Sports  AdvisorShares Hotel

Very poor diversification

The 3 months correlation between Roundhill and AdvisorShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Sports Betting and AdvisorShares Hotel ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Hotel ETF and Roundhill Sports 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 Roundhill Sports Betting are associated (or correlated) with AdvisorShares Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Hotel ETF has no effect on the direction of Roundhill Sports i.e., Roundhill Sports and AdvisorShares Hotel go up and down completely randomly.

Pair Corralation between Roundhill Sports and AdvisorShares Hotel

Given the investment horizon of 90 days Roundhill Sports Betting is expected to under-perform the AdvisorShares Hotel. But the etf apears to be less risky and, when comparing its historical volatility, Roundhill Sports Betting is 1.03 times less risky than AdvisorShares Hotel. The etf trades about -0.29 of its potential returns per unit of risk. The AdvisorShares Hotel ETF is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  3,419  in AdvisorShares Hotel ETF on October 6, 2024 and sell it today you would lose (142.00) from holding AdvisorShares Hotel ETF or give up 4.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Roundhill Sports Betting  vs.  AdvisorShares Hotel ETF

Roundhill Sports Betting

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill Sports Betting are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Roundhill Sports is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AdvisorShares Hotel ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Hotel ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, AdvisorShares Hotel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Roundhill Sports and AdvisorShares Hotel

The main advantage of trading using opposite Roundhill Sports and AdvisorShares Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Sports position performs unexpectedly, AdvisorShares Hotel 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 Hotel will offset losses from the drop in AdvisorShares Hotel's long position.

The idea behind Roundhill Sports Betting and AdvisorShares Hotel ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.