Correlation Between AdvisorShares Pure and POTX

Can any of the company-specific risk be diversified away by investing in both AdvisorShares Pure and POTX 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 POTX 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 POTX, you can compare the effects of market volatilities on AdvisorShares Pure and POTX 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 POTX. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Pure and POTX.

Diversification Opportunities for AdvisorShares Pure and POTX

0.76

Correlation Coefficient

AdvisorShares Pure  POTX

Poor diversification

The 3 months correlation between AdvisorShares and POTX is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Pure Cannabis and POTX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POTX 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 POTX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POTX has no effect on the direction of AdvisorShares Pure i.e., AdvisorShares Pure and POTX go up and down completely randomly.

Pair Corralation between AdvisorShares Pure and POTX

If you would invest  516.00  in POTX on September 12, 2024 and sell it today you would earn a total of  0.00  from holding POTX or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	3.13%
Values	Daily Returns

AdvisorShares Pure Cannabis  vs.  POTX

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

POTX

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AdvisorShares Pure and POTX

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

The idea behind AdvisorShares Pure Cannabis and POTX 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.