Correlation Between AdvisorShares and 6 Meridian

Can any of the company-specific risk be diversified away by investing in both AdvisorShares and 6 Meridian 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 6 Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AdvisorShares Q Dynamic and 6 Meridian Quality, you can compare the effects of market volatilities on AdvisorShares and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares and 6 Meridian.

Diversification Opportunities for AdvisorShares and 6 Meridian

0.93

Correlation Coefficient

AdvisorShares  6 Meridian

Almost no diversification

The 3 months correlation between AdvisorShares and SXQG is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Q Dynamic and 6 Meridian Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Quality 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 Q Dynamic are associated (or correlated) with 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Quality has no effect on the direction of AdvisorShares i.e., AdvisorShares and 6 Meridian go up and down completely randomly.

Pair Corralation between AdvisorShares and 6 Meridian

Considering the 90-day investment horizon AdvisorShares Q Dynamic is expected to under-perform the 6 Meridian. But the etf apears to be less risky and, when comparing its historical volatility, AdvisorShares Q Dynamic is 1.03 times less risky than 6 Meridian. The etf trades about -0.26 of its potential returns per unit of risk. The 6 Meridian Quality is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  3,296  in 6 Meridian Quality on October 16, 2024 and sell it today you would lose (151.00) from holding 6 Meridian Quality or give up 4.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

AdvisorShares Q Dynamic  vs.  6 Meridian Quality

AdvisorShares Q Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

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

6 Meridian Quality

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 6 Meridian Quality are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, 6 Meridian is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AdvisorShares and 6 Meridian

The main advantage of trading using opposite AdvisorShares and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.

The idea behind AdvisorShares Q Dynamic and 6 Meridian Quality 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.