Correlation Between NuShares Enhanced and AdvisorShares

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

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

Diversification Opportunities for NuShares Enhanced and AdvisorShares

-0.44

Correlation Coefficient

NuShares Enhanced  AdvisorShares

Very good diversification

The 3 months correlation between NuShares and AdvisorShares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NuShares Enhanced Yield and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and NuShares Enhanced 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 NuShares Enhanced Yield 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 NuShares Enhanced i.e., NuShares Enhanced and AdvisorShares go up and down completely randomly.

Pair Corralation between NuShares Enhanced and AdvisorShares

If you would invest  4,492  in AdvisorShares on October 24, 2024 and sell it today you would earn a total of  0.00  from holding AdvisorShares or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.69%
Values	Daily Returns

NuShares Enhanced Yield  vs.  AdvisorShares

NuShares Enhanced Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuShares Enhanced Yield has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NuShares Enhanced is not utilizing all of its potentials. The current 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 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.

Pair Trading with NuShares Enhanced and AdvisorShares

The main advantage of trading using opposite NuShares Enhanced and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NuShares Enhanced 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 NuShares Enhanced Yield 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.