Correlation Between Invesco DWA and AdvisorShares STAR

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

By analyzing existing cross correlation between Invesco DWA Developed and AdvisorShares STAR Global, you can compare the effects of market volatilities on Invesco DWA 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 Invesco DWA with a short position of AdvisorShares STAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and AdvisorShares STAR.

Diversification Opportunities for Invesco DWA and AdvisorShares STAR

0.72

Correlation Coefficient

Invesco DWA  AdvisorShares STAR

Poor diversification

The 3 months correlation between Invesco and AdvisorShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Developed 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 Invesco DWA 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 Invesco DWA Developed 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 Invesco DWA i.e., Invesco DWA and AdvisorShares STAR go up and down completely randomly.

Pair Corralation between Invesco DWA and AdvisorShares STAR

Considering the 90-day investment horizon Invesco DWA is expected to generate 2.15 times less return on investment than AdvisorShares STAR. In addition to that, Invesco DWA is 2.1 times more volatile than AdvisorShares STAR Global. It trades about 0.05 of its total potential returns per unit of risk. AdvisorShares STAR Global is currently generating about 0.21 per unit of volatility. If you would invest  4,611  in AdvisorShares STAR Global on June 30, 2025 and sell it today you would earn a total of  227.00  from holding AdvisorShares STAR Global or generate 4.92% return on investment over 90 days.

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

Invesco DWA Developed  vs.  AdvisorShares STAR Global

Invesco DWA Developed

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DWA Developed are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Invesco DWA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AdvisorShares STAR Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares STAR Global are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Invesco DWA and AdvisorShares STAR

The main advantage of trading using opposite Invesco DWA and AdvisorShares STAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DWA 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.

The idea behind Invesco DWA Developed and AdvisorShares STAR Global 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.