Correlation Between Vanguard Small and AdvisorShares Pure

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

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

Diversification Opportunities for Vanguard Small and AdvisorShares Pure

-0.9

Correlation Coefficient

Vanguard Small  AdvisorShares Pure

Pay attention - limited upside

The 3 months correlation between Vanguard and AdvisorShares is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and AdvisorShares Pure Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Pure and Vanguard Small 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 Vanguard Small Cap Growth 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 Vanguard Small i.e., Vanguard Small and AdvisorShares Pure go up and down completely randomly.

Pair Corralation between Vanguard Small and AdvisorShares Pure

Considering the 90-day investment horizon Vanguard Small Cap Growth is expected to generate 0.4 times more return on investment than AdvisorShares Pure. However, Vanguard Small Cap Growth is 2.52 times less risky than AdvisorShares Pure. It trades about 0.08 of its potential returns per unit of risk. AdvisorShares Pure Cannabis is currently generating about -0.01 per unit of risk. If you would invest  19,582  in Vanguard Small Cap Growth on September 15, 2024 and sell it today you would earn a total of  9,920  from holding Vanguard Small Cap Growth or generate 50.66% return on investment over 90 days.

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

Vanguard Small Cap Growth  vs.  AdvisorShares Pure Cannabis

Vanguard Small Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Growth are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental drivers, Vanguard Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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

Pair Trading with Vanguard Small and AdvisorShares Pure

The main advantage of trading using opposite Vanguard Small and AdvisorShares Pure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small 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 Vanguard Small Cap Growth 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 CEOs Directory module to screen CEOs from public companies around the world.