Correlation Between AdvisorShares and Vanguard Intermediate

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

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

Diversification Opportunities for AdvisorShares and Vanguard Intermediate

0.0

Correlation Coefficient

AdvisorShares  Vanguard Intermediate

Pay attention - limited upside

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

Pair Corralation between AdvisorShares and Vanguard Intermediate

If you would invest  7,585  in Vanguard Intermediate Term Bond on December 4, 2024 and sell it today you would earn a total of  72.00  from holding Vanguard Intermediate Term Bond or generate 0.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AdvisorShares  vs.  Vanguard Intermediate Term Bon

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. In spite of rather sound basic indicators, AdvisorShares is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Vanguard Intermediate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Intermediate Term Bond are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Vanguard Intermediate is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AdvisorShares and Vanguard Intermediate

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

The idea behind AdvisorShares and Vanguard Intermediate Term Bond 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.