Correlation Between Vanguard Russell and AdvisorShares

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

By analyzing existing cross correlation between Vanguard Russell 1000 and AdvisorShares, you can compare the effects of market volatilities on Vanguard Russell 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 Vanguard Russell with a short position of AdvisorShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and AdvisorShares.

Diversification Opportunities for Vanguard Russell and AdvisorShares

-0.87

Correlation Coefficient

Vanguard Russell  AdvisorShares

Pay attention - limited upside

The 3 months correlation between Vanguard and AdvisorShares is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and Vanguard Russell 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 Russell 1000 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 Vanguard Russell i.e., Vanguard Russell and AdvisorShares go up and down completely randomly.

Pair Corralation between Vanguard Russell and AdvisorShares

If you would invest  9,769  in Vanguard Russell 1000 on October 11, 2024 and sell it today you would earn a total of  641.00  from holding Vanguard Russell 1000 or generate 6.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.61%
Values	Daily Returns

Vanguard Russell 1000  vs.  AdvisorShares

Vanguard Russell 1000

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 1000 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. Even with relatively invariable technical and fundamental indicators, AdvisorShares is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vanguard Russell and AdvisorShares

The main advantage of trading using opposite Vanguard Russell and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Russell 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 Vanguard Russell 1000 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.