Correlation Between SonicShares Global and AdvisorShares Hotel

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

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

Diversification Opportunities for SonicShares Global and AdvisorShares Hotel

-0.72

Correlation Coefficient

SonicShares Global  AdvisorShares Hotel

Pay attention - limited upside

The 3 months correlation between SonicShares and AdvisorShares is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SonicShares Global Shipping 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 SonicShares Global 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 SonicShares Global Shipping 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 SonicShares Global i.e., SonicShares Global and AdvisorShares Hotel go up and down completely randomly.

Pair Corralation between SonicShares Global and AdvisorShares Hotel

Given the investment horizon of 90 days SonicShares Global is expected to generate 4.79 times less return on investment than AdvisorShares Hotel. In addition to that, SonicShares Global is 1.29 times more volatile than AdvisorShares Hotel ETF. It trades about 0.01 of its total potential returns per unit of risk. AdvisorShares Hotel ETF is currently generating about 0.07 per unit of volatility. If you would invest  2,753  in AdvisorShares Hotel ETF on October 14, 2024 and sell it today you would earn a total of  485.00  from holding AdvisorShares Hotel ETF or generate 17.62% return on investment over 90 days.

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

SonicShares Global Shipping  vs.  AdvisorShares Hotel ETF

SonicShares Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SonicShares Global Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

AdvisorShares Hotel ETF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Hotel ETF are ranked lower than 7 (%) 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 SonicShares Global and AdvisorShares Hotel

The main advantage of trading using opposite SonicShares Global and AdvisorShares Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SonicShares Global 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 SonicShares Global Shipping 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.