Correlation Between AdvisorShares STAR and Invesco International
Can any of the company-specific risk be diversified away by investing in both AdvisorShares STAR and Invesco International 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 Invesco International 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 Invesco International Dividend, you can compare the effects of market volatilities on AdvisorShares STAR and Invesco International 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 Invesco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares STAR and Invesco International.
Diversification Opportunities for AdvisorShares STAR and Invesco International
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AdvisorShares and Invesco is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares STAR Global and Invesco International Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International 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 Invesco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of AdvisorShares STAR i.e., AdvisorShares STAR and Invesco International go up and down completely randomly.
Pair Corralation between AdvisorShares STAR and Invesco International
Given the investment horizon of 90 days AdvisorShares STAR Global is expected to generate 0.81 times more return on investment than Invesco International. However, AdvisorShares STAR Global is 1.23 times less risky than Invesco International. It trades about 0.03 of its potential returns per unit of risk. Invesco International Dividend is currently generating about 0.02 per unit of risk. If you would invest 3,557 in AdvisorShares STAR Global on January 25, 2024 and sell it today you would earn a total of 444.00 from holding AdvisorShares STAR Global or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvisorShares STAR Global vs. Invesco International Dividend
Performance |
| Timeline |
| AdvisorShares STAR Global |
| Invesco International |
AdvisorShares STAR and Invesco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares STAR and Invesco International
The main advantage of trading using opposite AdvisorShares STAR and Invesco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares STAR position performs unexpectedly, Invesco International 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 Invesco International will offset losses from the drop in Invesco International's long position.| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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