Correlation Between AdvisorShares Pure and Roundhill Video

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

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

Diversification Opportunities for AdvisorShares Pure and Roundhill Video

-0.89

Correlation Coefficient

AdvisorShares Pure  Roundhill Video

Pay attention - limited upside

The 3 months correlation between AdvisorShares and Roundhill is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Pure Cannabis and Roundhill Video Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Video Games and AdvisorShares Pure 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 Pure Cannabis are associated (or correlated) with Roundhill Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Video Games has no effect on the direction of AdvisorShares Pure i.e., AdvisorShares Pure and Roundhill Video go up and down completely randomly.

Pair Corralation between AdvisorShares Pure and Roundhill Video

Given the investment horizon of 90 days AdvisorShares Pure Cannabis is expected to under-perform the Roundhill Video. In addition to that, AdvisorShares Pure is 2.37 times more volatile than Roundhill Video Games. It trades about -0.2 of its total potential returns per unit of risk. Roundhill Video Games is currently generating about 0.07 per unit of volatility. If you would invest  1,954  in Roundhill Video Games on October 25, 2024 and sell it today you would earn a total of  73.00  from holding Roundhill Video Games or generate 3.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AdvisorShares Pure Cannabis  vs.  Roundhill Video Games

AdvisorShares Pure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares Pure Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Roundhill Video Games

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill Video Games are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Roundhill Video exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AdvisorShares Pure and Roundhill Video

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

The idea behind AdvisorShares Pure Cannabis and Roundhill Video Games 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.