Correlation Between AdvisorShares Vice and SPDR Kensho

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

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

Diversification Opportunities for AdvisorShares Vice and SPDR Kensho

0.15

Correlation Coefficient

AdvisorShares Vice  SPDR Kensho

Average diversification

The 3 months correlation between AdvisorShares and SPDR is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Vice ETF and SPDR Kensho Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Clean and AdvisorShares Vice 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 Vice ETF are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Clean has no effect on the direction of AdvisorShares Vice i.e., AdvisorShares Vice and SPDR Kensho go up and down completely randomly.

Pair Corralation between AdvisorShares Vice and SPDR Kensho

Given the investment horizon of 90 days AdvisorShares Vice ETF is expected to generate 0.61 times more return on investment than SPDR Kensho. However, AdvisorShares Vice ETF is 1.64 times less risky than SPDR Kensho. It trades about -0.17 of its potential returns per unit of risk. SPDR Kensho Clean is currently generating about -0.12 per unit of risk. If you would invest  3,296  in AdvisorShares Vice ETF on September 25, 2024 and sell it today you would lose (106.00) from holding AdvisorShares Vice ETF or give up 3.22% of portfolio value over 90 days.

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

AdvisorShares Vice ETF  vs.  SPDR Kensho Clean

AdvisorShares Vice ETF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Vice ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, AdvisorShares Vice is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR Kensho Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Kensho Clean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPDR Kensho is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AdvisorShares Vice and SPDR Kensho

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

The idea behind AdvisorShares Vice ETF and SPDR Kensho Clean 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.