Correlation Between IShares and AdvisorShares

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

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

Diversification Opportunities for IShares and AdvisorShares

0.0

Correlation Coefficient

IShares  AdvisorShares

Pay attention - limited upside

The 3 months correlation between IShares and AdvisorShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding IShares and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and IShares 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 IShares are associated (or correlated) with AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of IShares i.e., IShares and AdvisorShares go up and down completely randomly.

Pair Corralation between IShares and AdvisorShares

If you would invest (100.00) in AdvisorShares on December 22, 2024 and sell it today you would earn a total of  100.00  from holding AdvisorShares or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IShares  vs.  AdvisorShares

IShares

Risk-Adjusted Performance

Very Weak

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

AdvisorShares

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares and AdvisorShares

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

The idea behind IShares and AdvisorShares 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..