Correlation Between IMGP DBi and AdvisorShares

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

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

Diversification Opportunities for IMGP DBi and AdvisorShares

-0.7

Correlation Coefficient

IMGP DBi  AdvisorShares

Excellent diversification

The 3 months correlation between IMGP and AdvisorShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding iMGP DBi Managed and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and IMGP DBi 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 iMGP DBi Managed 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 IMGP DBi i.e., IMGP DBi and AdvisorShares go up and down completely randomly.

Pair Corralation between IMGP DBi and AdvisorShares

If you would invest  2,696  in iMGP DBi Managed on September 18, 2024 and sell it today you would earn a total of  18.00  from holding iMGP DBi Managed or generate 0.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

iMGP DBi Managed  vs.  AdvisorShares

iMGP DBi Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iMGP DBi Managed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, IMGP DBi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

AdvisorShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AdvisorShares is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IMGP DBi and AdvisorShares

The main advantage of trading using opposite IMGP DBi and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMGP DBi 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 iMGP DBi Managed 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.