Correlation Between AdvisorShares STAR and Tidal Trust

Can any of the company-specific risk be diversified away by investing in both AdvisorShares STAR and Tidal Trust 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 Tidal Trust 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 Tidal Trust II, you can compare the effects of market volatilities on AdvisorShares STAR and Tidal Trust 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 Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares STAR and Tidal Trust.

Diversification Opportunities for AdvisorShares STAR and Tidal Trust

-0.12

Correlation Coefficient

AdvisorShares STAR  Tidal Trust

Good diversification

The 3 months correlation between AdvisorShares and Tidal is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares STAR Global and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of AdvisorShares STAR i.e., AdvisorShares STAR and Tidal Trust go up and down completely randomly.

Pair Corralation between AdvisorShares STAR and Tidal Trust

Given the investment horizon of 90 days AdvisorShares STAR Global is expected to generate 0.18 times more return on investment than Tidal Trust. However, AdvisorShares STAR Global is 5.71 times less risky than Tidal Trust. It trades about -0.01 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.07 per unit of risk. If you would invest  4,355  in AdvisorShares STAR Global on December 22, 2024 and sell it today you would lose (27.00) from holding AdvisorShares STAR Global or give up 0.62% of portfolio value over 90 days.

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

AdvisorShares STAR Global  vs.  Tidal Trust II

AdvisorShares STAR Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvisorShares STAR Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, AdvisorShares STAR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Tidal Trust II

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tidal Trust II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with AdvisorShares STAR and Tidal Trust

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

The idea behind AdvisorShares STAR Global and Tidal Trust II 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.