Correlation Between ASHX and AdvisorShares Dorsey

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

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

Diversification Opportunities for ASHX and AdvisorShares Dorsey

-0.66

Correlation Coefficient

ASHX  AdvisorShares Dorsey

Excellent diversification

The 3 months correlation between ASHX and AdvisorShares is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ASHX and AdvisorShares Dorsey Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Dorsey and ASHX 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 ASHX are associated (or correlated) with AdvisorShares Dorsey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Dorsey has no effect on the direction of ASHX i.e., ASHX and AdvisorShares Dorsey go up and down completely randomly.

Pair Corralation between ASHX and AdvisorShares Dorsey

If you would invest  6,253  in AdvisorShares Dorsey Wright on September 17, 2024 and sell it today you would earn a total of  867.00  from holding AdvisorShares Dorsey Wright or generate 13.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	3.13%
Values	Daily Returns

ASHX  vs.  AdvisorShares Dorsey Wright

ASHX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASHX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, ASHX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AdvisorShares Dorsey

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Dorsey Wright are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, AdvisorShares Dorsey reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASHX and AdvisorShares Dorsey

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

The idea behind ASHX and AdvisorShares Dorsey Wright 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.