Correlation Between Vanguard Consumer and AdvisorShares Hotel
Can any of the company-specific risk be diversified away by investing in both Vanguard Consumer 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 Vanguard Consumer and AdvisorShares Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Consumer Discretionary and AdvisorShares Hotel ETF, you can compare the effects of market volatilities on Vanguard Consumer 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 Vanguard Consumer with a short position of AdvisorShares Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Consumer and AdvisorShares Hotel.
Diversification Opportunities for Vanguard Consumer and AdvisorShares Hotel
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and AdvisorShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Consumer Discretionar 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 Vanguard Consumer 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 Vanguard Consumer Discretionary 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 Vanguard Consumer i.e., Vanguard Consumer and AdvisorShares Hotel go up and down completely randomly.
Pair Corralation between Vanguard Consumer and AdvisorShares Hotel
Considering the 90-day investment horizon Vanguard Consumer Discretionary is expected to generate 1.19 times more return on investment than AdvisorShares Hotel. However, Vanguard Consumer is 1.19 times more volatile than AdvisorShares Hotel ETF. It trades about 0.1 of its potential returns per unit of risk. AdvisorShares Hotel ETF is currently generating about -0.03 per unit of risk. If you would invest 37,322 in Vanguard Consumer Discretionary on September 24, 2024 and sell it today you would earn a total of 1,048 from holding Vanguard Consumer Discretionary or generate 2.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.24% |
Values | Daily Returns |
Vanguard Consumer Discretionar vs. AdvisorShares Hotel ETF
Performance |
Timeline |
Vanguard Consumer |
AdvisorShares Hotel ETF |
Vanguard Consumer and AdvisorShares Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Consumer and AdvisorShares Hotel
The main advantage of trading using opposite Vanguard Consumer and AdvisorShares Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Consumer 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.Vanguard Consumer vs. Vanguard Consumer Staples | Vanguard Consumer vs. Vanguard Industrials Index | Vanguard Consumer vs. Vanguard Communication Services | Vanguard Consumer vs. Vanguard Materials Index |
AdvisorShares Hotel vs. Invesco SP 500 | AdvisorShares Hotel vs. Invesco SP 500 | AdvisorShares Hotel vs. Invesco SP 500 | AdvisorShares Hotel vs. Aquagold International |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |