Correlation Between AdvisorShares Vice and Invesco Global

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

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

Diversification Opportunities for AdvisorShares Vice and Invesco Global

0.83

Correlation Coefficient

AdvisorShares Vice  Invesco Global

Very poor diversification

The 3 months correlation between AdvisorShares and Invesco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Vice ETF and Invesco Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Global Listed and AdvisorShares Vice 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 Vice ETF are associated (or correlated) with Invesco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Global Listed has no effect on the direction of AdvisorShares Vice i.e., AdvisorShares Vice and Invesco Global go up and down completely randomly.

Pair Corralation between AdvisorShares Vice and Invesco Global

Given the investment horizon of 90 days AdvisorShares Vice is expected to generate 2.23 times less return on investment than Invesco Global. But when comparing it to its historical volatility, AdvisorShares Vice ETF is 1.36 times less risky than Invesco Global. It trades about 0.05 of its potential returns per unit of risk. Invesco Global Listed is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,200  in Invesco Global Listed on September 20, 2024 and sell it today you would earn a total of  2,497  from holding Invesco Global Listed or generate 59.45% return on investment over 90 days.

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

AdvisorShares Vice ETF  vs.  Invesco Global Listed

AdvisorShares Vice ETF

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Vice ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, AdvisorShares Vice is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco Global Listed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Global Listed has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Invesco Global is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AdvisorShares Vice and Invesco Global

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

The idea behind AdvisorShares Vice ETF and Invesco Global Listed 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.