Correlation Between SPDR SP and AdvisorShares Pure

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

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

Diversification Opportunities for SPDR SP and AdvisorShares Pure

-0.7

Correlation Coefficient

SPDR SP  AdvisorShares Pure

Excellent diversification

The 3 months correlation between SPDR and AdvisorShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Oil and AdvisorShares Pure Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Pure and SPDR SP 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 SPDR SP Oil are associated (or correlated) with AdvisorShares Pure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Pure has no effect on the direction of SPDR SP i.e., SPDR SP and AdvisorShares Pure go up and down completely randomly.

Pair Corralation between SPDR SP and AdvisorShares Pure

Considering the 90-day investment horizon SPDR SP Oil is expected to generate 0.97 times more return on investment than AdvisorShares Pure. However, SPDR SP Oil is 1.04 times less risky than AdvisorShares Pure. It trades about -0.15 of its potential returns per unit of risk. AdvisorShares Pure Cannabis is currently generating about -0.4 per unit of risk. If you would invest  14,220  in SPDR SP Oil on September 15, 2024 and sell it today you would lose (624.00) from holding SPDR SP Oil or give up 4.39% of portfolio value over 90 days.

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

SPDR SP Oil  vs.  AdvisorShares Pure Cannabis

SPDR SP Oil

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Oil are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, SPDR SP is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

AdvisorShares Pure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares Pure Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with SPDR SP and AdvisorShares Pure

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

The idea behind SPDR SP Oil and AdvisorShares Pure Cannabis 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.