Correlation Between POTX and AdvisorShares Pure

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

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

Diversification Opportunities for POTX and AdvisorShares Pure

0.0

Correlation Coefficient

POTX  AdvisorShares Pure

Pay attention - limited upside

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

Pair Corralation between POTX and AdvisorShares Pure

If you would invest (100.00) in POTX on December 2, 2024 and sell it today you would earn a total of  100.00  from holding POTX or generate -100.0% return on investment over 90 days.

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

POTX  vs.  AdvisorShares Pure Cannabis

POTX

Risk-Adjusted Performance

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.

AdvisorShares Pure

Risk-Adjusted Performance

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 weak performance in the last few months, the Etf's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with POTX and AdvisorShares Pure

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

The idea behind POTX and AdvisorShares Pure Cannabis 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.