Correlation Between Vanguard Mega and AdvisorShares Gerber

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

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

Diversification Opportunities for Vanguard Mega and AdvisorShares Gerber

0.98

Correlation Coefficient

Vanguard Mega  AdvisorShares Gerber

Almost no diversification

The 3 months correlation between Vanguard and AdvisorShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mega Cap and AdvisorShares Gerber Kawasaki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Gerber and Vanguard Mega 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 Vanguard Mega Cap are associated (or correlated) with AdvisorShares Gerber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Gerber has no effect on the direction of Vanguard Mega i.e., Vanguard Mega and AdvisorShares Gerber go up and down completely randomly.

Pair Corralation between Vanguard Mega and AdvisorShares Gerber

Considering the 90-day investment horizon Vanguard Mega Cap is expected to generate 1.0 times more return on investment than AdvisorShares Gerber. However, Vanguard Mega is 1.0 times more volatile than AdvisorShares Gerber Kawasaki. It trades about -0.1 of its potential returns per unit of risk. AdvisorShares Gerber Kawasaki is currently generating about -0.1 per unit of risk. If you would invest  34,671  in Vanguard Mega Cap on December 28, 2024 and sell it today you would lose (2,974) from holding Vanguard Mega Cap or give up 8.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Vanguard Mega Cap  vs.  AdvisorShares Gerber Kawasaki

Vanguard Mega Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Mega Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

AdvisorShares Gerber

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvisorShares Gerber Kawasaki has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Vanguard Mega and AdvisorShares Gerber

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

The idea behind Vanguard Mega Cap and AdvisorShares Gerber Kawasaki 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.