Correlation Between Innovator ETFs and AdvisorShares STAR
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs and AdvisorShares STAR 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 Innovator ETFs and AdvisorShares STAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator ETFs Trust and AdvisorShares STAR Global, you can compare the effects of market volatilities on Innovator ETFs and AdvisorShares STAR 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 Innovator ETFs with a short position of AdvisorShares STAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and AdvisorShares STAR.
Diversification Opportunities for Innovator ETFs and AdvisorShares STAR
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innovator and AdvisorShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and AdvisorShares STAR Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares STAR Global and Innovator ETFs 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 Innovator ETFs Trust are associated (or correlated) with AdvisorShares STAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares STAR Global has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and AdvisorShares STAR go up and down completely randomly.
Pair Corralation between Innovator ETFs and AdvisorShares STAR
Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.15 times less return on investment than AdvisorShares STAR. But when comparing it to its historical volatility, Innovator ETFs Trust is 1.85 times less risky than AdvisorShares STAR. It trades about 0.13 of its potential returns per unit of risk. AdvisorShares STAR Global is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,875 in AdvisorShares STAR Global on September 25, 2024 and sell it today you would earn a total of 480.00 from holding AdvisorShares STAR Global or generate 12.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.6% |
Values | Daily Returns |
Innovator ETFs Trust vs. AdvisorShares STAR Global
Performance |
Timeline |
Innovator ETFs Trust |
AdvisorShares STAR Global |
Innovator ETFs and AdvisorShares STAR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Innovator ETFs and AdvisorShares STAR
The main advantage of trading using opposite Innovator ETFs and AdvisorShares STAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs position performs unexpectedly, AdvisorShares STAR 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 STAR will offset losses from the drop in AdvisorShares STAR's long position.Innovator ETFs vs. First Trust Exchange Traded | Innovator ETFs vs. First Trust Exchange Traded | Innovator ETFs vs. FT Cboe Vest | Innovator ETFs vs. FT Cboe Vest |
AdvisorShares STAR vs. AdvisorShares Dorsey Wright | AdvisorShares STAR vs. Vident Core Bond | AdvisorShares STAR vs. WBI BullBear Quality | AdvisorShares STAR vs. WBI BullBear Value |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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