Correlation Between AdvisorShares Vice and AdvisorShares

Can any of the company-specific risk be diversified away by investing in both AdvisorShares Vice 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 AdvisorShares Vice and AdvisorShares 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 AdvisorShares, you can compare the effects of market volatilities on AdvisorShares Vice 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 AdvisorShares Vice with a short position of AdvisorShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Vice and AdvisorShares.

Diversification Opportunities for AdvisorShares Vice and AdvisorShares

0.84

Correlation Coefficient

AdvisorShares Vice  AdvisorShares

Very poor diversification

The 3 months correlation between AdvisorShares and AdvisorShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Vice ETF and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares 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 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 AdvisorShares Vice i.e., AdvisorShares Vice and AdvisorShares go up and down completely randomly.

Pair Corralation between AdvisorShares Vice and AdvisorShares

Given the investment horizon of 90 days AdvisorShares Vice is expected to generate 1.16 times less return on investment than AdvisorShares. In addition to that, AdvisorShares Vice is 1.05 times more volatile than AdvisorShares. It trades about 0.06 of its total potential returns per unit of risk. AdvisorShares is currently generating about 0.07 per unit of volatility. If you would invest  2,260  in AdvisorShares on September 19, 2024 and sell it today you would earn a total of  183.00  from holding AdvisorShares or generate 8.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	28.63%
Values	Daily Returns

AdvisorShares Vice ETF  vs.  AdvisorShares

AdvisorShares Vice ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Vice ETF are ranked lower than 10 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 comparatively stable basic indicators, AdvisorShares is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AdvisorShares Vice and AdvisorShares

The main advantage of trading using opposite AdvisorShares Vice and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Vice 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 AdvisorShares Vice ETF 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.